How the profit margin calculator works
Margin and markup both describe profit, but against different bases. Margin is profit as a share of the selling price; markup is profit as a share of cost. Mixing them up is a common pricing mistake.
Margin = Profit ÷ Price
Markup = Profit ÷ Cost
Price for target margin = Cost ÷ (1 − margin)
A 50% markup is only a 33.3% margin, and a 50% margin requires a 100% markup. Margin can never reach 100%, while markup has no upper limit. Gross margin uses only the direct cost of the goods; net margin would also subtract overhead, salaries and taxes.
Worked example
An item costs $60 and sells for $100. Profit is $40, the margin is 40% and the markup is 66.67%. To reach a 50% margin on the same item, you would need to price it at 60 ÷ 0.5 = $120.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by price; markup divides profit by cost. A $40 profit on a $100 sale is a 40% margin and a 66.7% markup.
How do I convert markup to margin?
Margin = Markup ÷ (1 + Markup). A 25% markup is a 20% margin.
What is a good profit margin?
It depends on the industry. Compare with peers in your sector.
How do I price for a target margin?
Divide cost by (1 − target margin). For a 40% margin on a $30 cost, price at $50.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.