How is profit margin calculated?

Margin = (revenue − cost) ÷ revenue × 100. Selling at $100 with a $60 cost gives ($100 − $60) ÷ $100 = 40% margin. Margin is always expressed as a percentage of the selling price.

What is the difference between margin and markup?

Margin divides profit by the selling price; markup divides profit by the cost. The same $60 cost and $100 price is a 40% margin but a 66.7% markup. Confusing the two is one of the most expensive pricing errors in retail.

How do I find the selling price for a target margin?

Price = cost ÷ (1 − margin). For a $60 cost and 40% target margin: $60 ÷ 0.60 = $100. Multiplying cost by (1 + margin) — the markup formula — undershoots the target.

What is a good profit margin?

It varies enormously by industry: grocery runs 1–3% net, general retail 5–10%, e-commerce 10–20% gross after fees, software 70–90% gross. Compare against your specific industry, not a universal number.

What is the difference between gross and net margin?

Gross margin subtracts only the direct cost of goods; net margin subtracts everything — marketing, shipping, fees, salaries, overhead. A product can carry a healthy 45% gross margin and still lose money net after ad spend.

Margin Calculator — Profit Margin, Markup & Selling Pric...

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Margin Calculator — Price for Profit, Not for Surprise

More money is lost to the margin-vs-markup confusion than to almost any other pricing mistake. A seller who wants a 40% margin, multiplies cost by 1.4, and ships the product has actually earned only a 28.6% margin — a gap that silently eats profitability at scale. This free margin calculator computes margin, markup, profit, and target selling price correctly from any two inputs, instantly and without signup.

Margin vs Markup — The Table Worth Bookmarking

Markup on cost	Actual margin
25%	20%
50%	33.3%
66.7%	40%
100%	50%
150%	60%
300%	75%

To hit a margin target, use price = cost ÷ (1 − margin). A $12 product cost with a 40% margin target needs a $20 price ($12 ÷ 0.60), not $16.80 ($12 × 1.4).

E-commerce Margin Reality Check

Marketplace sellers must margin against all per-unit costs, not just the factory price. A realistic stack for a $24.99 marketplace listing: product cost $6, inbound freight $1.50, referral fee ~15% ($3.75), fulfillment $5.50, returns allowance $0.75 — leaving about $7.49, a 30% net-of-fees margin before advertising. If ads run at 25% of sales, the real margin is ~5%. Running these numbers per SKU in this calculator before setting prices is the difference between growth and quietly funding a marketplace's fee structure.

Three Levers to Improve Margin

Raise price — a 5% price increase flows almost entirely to profit; test it before assuming customers will flee.
Cut landed cost — negotiate MOQ tiers, consolidate freight, re-quote suppliers annually.
Reduce fee drag — pricing just under fee-tier thresholds, lighter packaging for lower fulfillment tiers, and lower return rates all show up directly in net margin.

Gross vs Net: Know Which You're Quoting

Gross margin (revenue minus cost of goods) measures product economics; net margin (after every expense) measures business health. Investors and lenders ask for both. This calculator gives you the per-unit gross view — feed it your fully loaded per-unit cost to approximate the net view per sale.

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Unlimited calculations in your browser, no account, no stored data — test every SKU and price point you carry.

Margin Calculator

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