Profit Margin Calculator

Calculate your gross profit margin and markup based on cost and revenue.

Cost of Goods ($)

Sales Revenue / Selling Price ($)

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Enter your values and click Calculate

How It Works

The calculator starts by subtracting the cost of goods from the sales revenue to find the gross profit dollar amount. That gross profit is then divided by the total revenue and multiplied by 100 to produce the gross profit margin percentage — showing how much of each revenue dollar is retained as profit after covering direct costs. To calculate the markup percentage, the same gross profit figure is divided by the cost (rather than revenue) and multiplied by 100. Because markup divides by a smaller number (cost) than margin divides by (revenue), markup always produces a higher percentage than margin for the same transaction. For example, a product costing $60 and selling for $100 yields a 40% margin but a 66.7% markup — the same $40 profit described two different ways.

Examples

Healthy Retail Item

An item costs $60 to manufacture and sells for $100.

Result: Generates a gross profit of $40, representing a 40% profit margin and a 66.67% markup.

High Margin Software

A digital product costs $10 per unit in hosting/licensing but sells for $99.

Result: Generates an $89 gross profit, showing an 89.90% margin and an 890% markup.

Low Margin Grocery Item

A grocery product costs $4.50 and sells for $5.00.

Result: Gross profit is $0.50 with a 10% margin and an 11.11% markup.

Frequently Asked Questions

What is a good profit margin?

A 'good' margin depends heavily on the industry. A grocery store might operate on thin 2-3% net margins, while a software company might have gross margins of 80% or higher. Generally, a 10% net profit margin is considered average across many industries.

Is gross profit margin the same as net profit margin?

No. Gross profit margin only considers the direct costs of goods sold (COGS). Net profit margin accounts for all other business expenses like rent, marketing, payroll, and taxes.

Why is margin always lower than markup?

Markup relates profit to a smaller number (the cost). Margin relates that exact same profit to a larger number (the total revenue). Therefore, the margin percentage will mathematically always be lower than the markup percentage.