Financial Calculators
Profit Margin Calculator
Calculate profit, margin and markup from cost and selling price, solve for a target margin, or review a simple business profit breakdown.
Calculate profit margin
Profit Margin Calculator
Margin is profit divided by revenue; markup is profit divided by cost. They are not the same.
- Revenue / Required Selling Price
- —
- Cost / COGS
- —
- Profit / Net Margin
- —
- Markup
- —
- Gross Profit
- —
- Gross Margin
- —
- Operating Profit
- —
- Operating Margin
- —
- Planning Net Margin
- —
Business Profit mode is an operational planning estimate, not audited accounting net income. Corporate income tax is not modeled.
Your calculation is processed in your browser and is not stored by this tool.
Results use the amounts entered and are not accounting, pricing, tax or investment advice. Confirm which costs belong in each measure.
How to use the profit margin calculator
- 1
Choose margin, target margin, markup or business breakdown mode.
- 2
Enter cost and selling price, or the fields required by the selected mode.
- 3
For a target margin, enter the desired percentage below 100%.
- 4
For business mode, enter revenue, cost of goods sold and operating or other expenses.
- 5
Review profit, margin, markup and any gross or operating measures.
Profit margin and markup formulas
Profit = revenue − cost. Profit margin divides profit by revenue, while markup divides profit by cost. Because the denominators differ, margin and markup are not interchangeable. A business can report 40% margin and 66.67% markup on the same sale.
Margin versus markup example
If an item costs $60 and sells for $100, profit is $40. Profit margin is 40% because $40 is 40% of revenue. Markup is 66.67% because $40 is 66.67% of cost.
Calculating a target selling price
Target price is calculated as cost ÷ (1 − target margin). A $60 cost with a 40% target margin requires a $100 selling price. Multiplying cost by 1.40 would create a 40% markup, not a 40% margin.
Gross, operating and planning profit
Business mode separates revenue, cost of goods sold, operating expenses and other entered expenses. Gross profit is revenue minus COGS. Operating profit subtracts operating expenses. The final planning profit also subtracts the other-expense field. This is a simplified planning view and may not equal formal net income.
Important limitations
- Cost scope: include all costs relevant to the decision.
- Taxes and finance: tax, depreciation, interest and accounting adjustments are not automatically added.
- Pricing: market demand, capacity, discounts and competitors are not modeled.
- Zero denominators: margin or markup can be undefined when revenue or cost is zero.
Related tools
Profit Margin Calculator FAQ
What is the profit margin formula?
Profit margin equals profit divided by revenue, multiplied by 100.
What is the difference between margin and markup?
Margin uses revenue as the denominator; markup uses cost.
How do I calculate selling price for a target margin?
Divide cost by one minus the target margin written as a decimal.
Can profit margin be negative?
Yes. Margin is negative when the entered cost or expenses exceed revenue.
Does business mode calculate formal net income?
No. It provides a simplified planning profit from the fields entered.
Is a higher margin always better?
Not necessarily. Sales volume, demand, risk, costs and business strategy also matter.
Explore the complete Shopshubb Tools directory or return to Financial Calculators.