Margin Calculator

What is profit margin?

Profit margin is the percentage of revenue that remains as profit after deducting costs. It is calculated as: Margin % = ((Revenue − Cost) / Revenue) × 100. For example, if you sell a product for $100 that costs $80 to make, your profit margin is 20%. Margin always refers to profit as a share of the selling price.

What is the difference between margin and markup?

Margin and markup both measure profit, but from different perspectives. Margin is profit as a percentage of the selling price (revenue), while markup is profit as a percentage of the cost. For example, a product costing $80 sold for $100 has a 20% margin but a 25% markup. For positive profits, markup is always the larger percentage.

How do you calculate markup from margin?

To convert margin to markup, use this formula: Markup % = (Margin % / (100 − Margin %)) × 100. For example, a 20% margin equals a 25% markup: (20 / (100 − 20)) × 100 = (20 / 80) × 100 = 25%. A 50% margin equals a 100% markup.

What is a good profit margin?

A "good" profit margin varies by industry. Retail businesses typically see 3–5% net margins, while software companies can achieve 20–40%+. Gross profit margins of 30–50% are generally considered healthy for most businesses. Service-based businesses often have higher margins (50–80%) since they have lower cost of goods sold.

How do you calculate selling price from cost and margin?

To find the selling price when you know cost and desired margin, use: Selling Price = Cost / (1 − Margin / 100). For example, if your cost is $80 and you want a 20% margin: $80 / (1 − 0.20) = $80 / 0.80 = $100. This ensures that 20% of the $100 selling price is profit.

Is 50% markup the same as 50% margin?

No! They are very different. A 50% markup on a $100 cost means selling for $150 — the margin is only 33.33%. A 50% margin on a $100 cost means selling for $200 — the markup is 100%. Confusing these two is a common pricing mistake that can significantly impact profitability.

How do you convert markup to margin?

To convert markup to margin, use: Margin % = (Markup % / (100 + Markup %)) × 100. For example, a 25% markup equals a 20% margin: (25 / (100 + 25)) × 100 = (25 / 125) × 100 = 20%. A 100% markup equals a 50% margin.

What does negative margin mean?

A negative profit margin means you are selling a product or service for less than it costs to produce. This results in a loss on each sale. For example, if a product costs $100 to make and sells for $80, the margin is −25% because (80 − 100) / 80 × 100 = −25%. While sometimes intentional (loss leaders to attract customers), sustained negative margins are unsustainable.