Profit margin calculator
Profit margin is profit divided by selling price: (price − cost) ÷ price × 100. If something costs $80 and sells for $100, profit is $20, the margin is 20% and the markup is 25%, because markup divides the same profit by cost instead of price. To hit a target margin, price = cost ÷ (1 − margin).
Enter what an item costs you and what you sell it for to get gross profit, margin and markup at once. Or set the margin you want and get the price that delivers it. Need the price from a markup instead? Use the markup calculator.
Profit margin formula
Margin (%) = (price − cost) ÷ price × 100. Gross profit = price − cost.
Gross, operating and net margin
This calculator gives the gross margin on a product, a service or a deal: price against its direct cost. Operating margin also subtracts running costs such as salaries and rent, and net margin subtracts everything, including interest and tax.
Worked example
| Case | Result |
|---|---|
| Cost $80, price $100: gross profit | $20.00 |
| Profit margin | 20.00% |
| Markup | 25.00% |
| Target 30% margin on an $80 cost: price | $114.29 |
Price for a target margin
Price = cost ÷ (1 − margin). For a 30% margin on an $80 cost: $80 ÷ 0.70 = $114.29. A margin can approach but never reach 100%.
Margin on a discounted deal
Discounts come straight out of margin. A 10% discount on the $100 item above leaves $90 − $80 = $10 of profit: the margin falls from 20% to 11.1%, and you need twice the volume to earn the same gross profit. Check the margin before you approve a discount.
Frequently asked questions
How do you calculate profit margin?
Subtract cost from the selling price to get profit, divide profit by the selling price and multiply by 100. An item that costs $80 and sells for $100 has a $20 profit and a 20% margin.
What is a 30% margin on $100?
A 30% margin on a $100 selling price is $30 of profit, so the cost is $70. The markup on that cost is about 42.86%.
How do you calculate gross profit margin?
Gross profit margin = (revenue − cost of goods sold) ÷ revenue × 100. It leaves out operating costs such as rent, salaries and marketing, which operating and net margin include.
How do I price for a 70% profit margin?
Divide the cost by 1 minus the margin: price = cost ÷ (1 − 0.70) = cost ÷ 0.30. A $30 cost needs a $100 price for a 70% margin.
What is a good profit margin?
It depends on the industry. Software and services often run gross margins above 60%, while grocery and distribution work on much thinner ones. Compare yourself with your sector, for example with the margin tables NYU Stern publishes, rather than with a single number.
Is 20% margin the same as 25% markup?
Yes. Both describe a $20 profit on an item that costs $80 and sells for $100: margin divides the profit by the $100 price, markup divides it by the $80 cost.
Related tools: employee cost calculator, payroll calculator. More on sales and running a sales team on the SalesBond blog and the home page.
Official sources
- IRS Publication 334, Tax Guide for Small Business — gross profit = receipts − cost of goods sold.
- NYU Stern (Damodaran) — operating and net margins by industry.
Updated on Nov 5, 2026. This calculator is for information only and is not tax, legal or payroll advice. Results come from the formulas above and do not include taxes, overhead or payment fees.
