Margin Calculator: Profit Margin, Markup and Selling Price

This margin calculator needs just two numbers: what each unit costs you and what you charge for it. It gives you gross margin, markup and profit per unit, and it also works backwards to the selling price for the margin you are after.

How to use the margin calculator

1. Choose what you want to work out

   Done

   “I have cost and price” tells you the margin you have. “I want a margin” tells you what price gets you there.

2. Enter your cost per unit

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   What you pay for the product or what it costs to make. If every order carries shipping or a payment fee, add them here too.

3. Add the price or your target margin

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   The price as you charge it, or the margin as a % of the selling price. If your prices include VAT or another tax, open “Tax”, enter your rate and tick the box.

4. Read the result and copy it

   Done

   The bar shows how much of the price is cost, how much is profit and how much is tax. The formulas with your numbers sit right below.

How to calculate profit margin and markup

Margin measures profit against the price; markup measures it against the cost. With the calculator’s example of a $30 cost and a $50 price:

What you calculate	Formula	With the example
Profit per unit	price − cost	50 − 30 = $20
Margin	(price − cost) ÷ price	20 ÷ 50 = 40%
Markup	(price − cost) ÷ cost	20 ÷ 30 = 66.7%
Price for a margin	cost ÷ (1 − margin)	30 ÷ 0.60 = $50

That makes it a profit margin calculator and a markup calculator in one. Use it as a gross margin calculator for the whole business by entering monthly totals: revenue minus cost of goods sold, divided by revenue.

Gross profit vs gross margin: how to calculate each

Gross profit is an amount in dollars. Gross margin is that amount as a percentage of revenue. Think of the calculator as a gross profit calculator for one unit or for a whole month. The numbers below are made up.

	Gross profit	Gross margin
Formula	revenue − cost of goods sold	gross profit ÷ revenue × 100
One unit ($50 price, $30 cost)	$20	40%
One month ($12,000 sales, $7,200 product cost)	$4,800	40%

Use gross profit to see how much money is left to pay for rent, salaries and ads. Use gross margin to compare products or months of different sizes. A product with a thinner margin can still earn more gross profit if it sells in volume, so check both before deciding which one gets the ad budget.

Margin vs markup: the table to keep handy

This is the mix-up that costs the most money when you set prices. A 50% margin is not a 50% markup:

Margin	Markup	Multiply cost by
20%	25%	1.25
30%	42.9%	1.43
40%	66.7%	1.67
50%	100%	2
60%	150%	2.5
75%	300%	4

If a supplier or a client says “we work on 30%”, ask whether that is on cost or on price. The difference on a $70 item is $9 per unit.

Selling price with sales tax or VAT

Margin is always calculated on the price before tax, because sales tax is money you collect for the state, not revenue. In the US, prices are usually shown before tax, so you can leave the tax panel empty. If you sell somewhere prices include VAT, enter your rate and tick the box, and the calculator strips the tax out before it does the math.

Before you run a sale, check how much margin each discount eats with the percent off calculator. And to find out how many units you need to sell at that margin to cover rent and salaries, use the break-even calculator.

Wholesale price calculator: from retail price to your margin

If you sell through stores, you set two prices: the retail price the customer pays and the wholesale price the store pays you. The store keeps its own margin out of the retail price, so wholesale = retail × (1 − retailer margin). Say your product costs $14 to make and retails for $50 (made-up numbers).

Retailer margin	Wholesale price	Your margin on wholesale
40%	$30.00	53.3%
50% (keystone)	$25.00	44.0%
60%	$20.00	30.0%

Keystone pricing means the store doubles your wholesale price, which is a 50% retailer margin. It is a long-standing retail habit, not a rule, so ask each buyer what they expect. Then enter your cost and the wholesale price in the calculator to see whether the margin still pays your fixed costs.

Frequently asked questions about profit margin

01

How do you calculate profit margin?

Subtract cost from price, divide by price and multiply by 100. A product that costs $30 and sells for $50 makes $20, and $20 ÷ $50 = 40%. That is gross margin per unit. Net profit margin applies the same idea to the whole business: net income after every expense, divided by total revenue. Either way, margin is measured against what the customer pays, never against cost.

02

What is a good profit margin?

One that covers your fixed costs at the sales volume you actually hit and still leaves a profit. There is no universal number: a high-volume store can live on thin margins, while a custom service needs fat ones. The practical test runs backwards: plug your current margin into a break-even calculation and check whether your real monthly sales clear it. If they don’t, raise the price or cut the cost.

03

How do I calculate margin in Excel?

Put cost in A2 and price in B2. Margin is =(B2-A2)/B2 and markup is =(B2-A2)/A2; format both cells as percentages. To get a selling price from a target margin in C2 (say 40%), use =A2/(1-C2). Fill the formulas down the column and you have margin and markup for your whole catalog in seconds, ready to sort by the products that earn the least.

04

How do I convert markup to margin?

Divide the markup by 1 plus the markup. A 50% markup is 0.5 ÷ 1.5 = 33.3% margin, and a 100% markup is a 50% margin. To go the other way, divide the margin by 1 minus the margin: a 40% margin is 0.4 ÷ 0.6 = 66.7% markup. The table on this page lists the most common pairs, and the calculator shows both numbers every time you change a field.