Profit Margin Calculator
Calculate margin, markup, selling price or cost from any two known values. See gross margin vs true net margin once shipping, fees and other costs are factored in. Free, instant, any currency.
Margin vs Markup — The Trap Most People Fall Into
Margin and markup both measure profit, but from different bases — margin is profit as a percentage of your selling price, markup is profit as a percentage of your cost. Confusing the two is one of the most expensive mistakes in pricing.
Markup = (Price − Cost) ÷ Cost × 100
Gross Margin vs Net Margin — Why the Gap Can Be Brutal
Gross margin only accounts for the direct cost of the product itself. Net margin factors in everything else — shipping, payment processing fees, returns, and other overhead. A product that looks like it has a healthy 60% gross margin can quietly drop to 27% net margin once real costs are included — a gap of over 20 percentage points that catches many sellers off guard.
| Cost Type | Included in Gross Margin? | Included in Net Margin? |
|---|---|---|
| Product cost (COGS) | ✅ Yes | ✅ Yes |
| Shipping | ❌ No | ✅ Yes |
| Payment processing fees | ❌ No | ✅ Yes |
| Marketing / ad spend | ❌ No | ✅ Yes |
| Returns and refunds | ❌ No | ✅ Yes |
Always check both figures — gross margin tells you about production efficiency, but net margin tells you what you're actually keeping.
What Counts as a Healthy Margin?
- Retail / e-commerce. 25-50% gross margin is common, though rising input costs mean 25% is no longer considered a safe baseline for many product categories.
- Restaurants and food service. Typically 60-70% gross margin, but very thin net margins (3-9%) due to high overhead and labour costs.
- SaaS and software. Often 70-90% gross margin due to low marginal cost per additional customer.
- Consulting and services. Can range widely, often 50%+ since the primary cost is time rather than physical goods.
- A net margin under 8-10% is generally considered fragile — vulnerable to cost spikes, currency shifts or a single bad quarter.
Using This Calculator for Pricing Decisions
Beyond simply checking your current margin, this calculator's other two modes help with forward planning: use Find Selling Price when you know your costs and want to hit a specific margin target, or Find Max Cost when you have a fixed selling price (say, matching a competitor) and need to know the most you can afford to pay suppliers while still hitting your target margin. Once you know your pricing, our Discount Calculator can help you plan sale pricing without eroding your margin below a safe threshold.
FAQs
What's the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A 50% markup only equals a 33.3% margin — they’re commonly confused but genuinely different numbers.
What is a good profit margin?
It varies hugely by industry — retail typically runs 25-50% gross margin, SaaS often 70-90%, restaurants 60-70% gross but only 3-9% net due to overhead. Compare against your specific industry rather than a universal benchmark.
What's the difference between gross and net margin?
Gross margin only accounts for the direct product cost. Net margin includes everything else — shipping, fees, marketing, returns. The gap between them can be 20+ percentage points, which is why checking both matters.
How do I find the selling price I need for a target margin?
Use Find Selling Price mode — enter your cost and desired margin percentage, and the calculator works out exactly what price achieves that margin.
How do I know the maximum I can pay a supplier?
Use Find Max Cost mode — enter your selling price and target margin, and it calculates the highest cost you can accept while still hitting that margin.
Why is my margin lower than expected?
Often because only gross margin (product cost) was considered, ignoring shipping, payment fees, and other real costs. Toggle on “Include extra costs” to see your true net margin.
Can this calculator handle negative margins?
Yes — if your cost exceeds your selling price, the calculator will show a negative margin, meaning you’re losing money on each sale.
Is this calculator free?
Yes, completely free with no sign-up required.