Profit Margin Calculator (Free Business Tool)
Use this free profit margin calculator to work out your gross profit margin, find the right selling price for a target margin, or calculate your maximum allowable cost. Includes industry benchmark comparisons so you can see how your margins stack up.
Profit Margin Calculator
How to Use the Profit Margin Calculator
Choose your mode — Calculate Profit Margin, Find Selling Price, or Find Cost Price. Enter your figures and click Calculate for an instant result with a full breakdown.
What Is Profit Margin?
Profit margin is the percentage of revenue that remains after costs are deducted. It shows how much of every pound or dollar of sales is actual profit. A higher margin means more profit relative to revenue.
Gross Profit Margin Formula:
Profit Margin = ((Revenue − Cost) ÷ Revenue) × 100
For example: Revenue $150, Cost $90
Profit = $60, Margin = ($60 ÷ $150) × 100 = 40%
Profit Margin vs Markup — What's the Difference?
These two are often confused but are calculated differently:
Profit Margin is profit as a percentage of revenue (selling price)
Markup is profit as a percentage of cost
For example with a cost of $90 and selling price of $150:
- Profit Margin = 40% (profit ÷ revenue)
- Markup = 66.7% (profit ÷ cost)
Always be clear which one you’re using — a 40% margin is not the same as a 40% markup.
FAQs
What is a good profit margin?
It depends heavily on your industry. Retail typically runs 2–5%, e-commerce 10–15%, and service businesses like consulting can achieve 25–50%. Use the benchmark comparison in the calculator to see how you compare.
What is the difference between gross and net profit margin?
Gross profit margin only deducts the direct cost of goods sold. Net profit margin also deducts operating expenses, taxes and interest. This calculator calculates gross profit margin.
How do I price a product to hit a target margin?
Use the Find Selling Price mode — enter your cost and target margin and it tells you exactly what to charge.
What is markup?
Markup is profit expressed as a percentage of cost rather than revenue. A 50% markup on a $100 cost gives a $150 selling price, which is a 33.3% profit margin.
Is this calculator free?
Yes, completely free with no sign-up needed.