Free Profit Margin & Markup Calculator
Enter what you sell for and what it costs you. You get gross profit, margin, markup and the price a target margin would need — all at once, so you never have to convert one into the other. Results update as you type. Your numbers stay in your browser and are never sent to Instilus.
How the profit margin formula works
Profit margin % = (price − cost) ÷ price × 100
Markup % = (price − cost) ÷ cost × 100
Both start from the same gross profit. The only difference is what you divide it by: the price gives margin, the cost gives markup. Markup is always the bigger number, which is why "we add 50%" and "we make 50%" are not the same business.
- Gross profit = price − cost
- Margin from markup = markup ÷ (100 + markup) × 100
- Markup from margin = margin ÷ (100 − margin) × 100
- Price for a target margin = cost ÷ (1 − target margin ÷ 100)
Worked example
A shop buys an item for 20 including packaging and payment fees, and sells it for 50.
| Gross profit per unit | 50 − 20 = 30 |
| Profit margin | 30 ÷ 50 = 60% |
| Markup | 30 ÷ 20 = 150% |
| Price needed for a 70% margin | 20 ÷ 0.30 = 66.67 |
| Gross profit on 250 units | 30 × 250 = 7,500 |
The same sale is a 60% margin and a 150% markup. To reach a 70% margin the price has to rise to 66.67, not to 20 + 70% = 34 — that would be a 70% markup and only a 41.2% margin.
Edge cases this calculator handles
- Cost higher than price. The margin is negative and the page says so plainly: every sale loses money, and selling more makes the loss bigger.
- Zero cost. A digital product with no per-unit cost is a 100% margin. Markup is left blank rather than shown as infinity, because a share of nothing has no percentage.
- Zero price. There is no margin to report — margin is a share of the price. The calculator says so instead of showing a division by zero.
- Target margin of 100% or more. Impossible by definition, so it is refused rather than returning a negative or infinite price.
- Tax-inclusive prices. Take the VAT or sales tax out first. Tax you collect is not your revenue, and leaving it in overstates the margin.
Frequently asked questions
What is the difference between profit margin and markup?
They measure the same profit against different things. Margin is profit as a share of the selling price; markup is the same profit as a share of the cost. Buy for 20 and sell for 30 and the profit is 10, which is a 33.3% margin (10 ÷ 30) but a 50% markup (10 ÷ 20). Markup is always the larger number.
How do you calculate profit margin?
Subtract the cost from the selling price to get gross profit, divide that by the selling price and multiply by 100. Selling at 50 with a cost of 20 gives (50 − 20) ÷ 50 × 100 = 60%.
How do I convert a markup into a margin, or a margin into a markup?
Margin = markup ÷ (100 + markup) × 100, and markup = margin ÷ (100 − margin) × 100. So a 50% markup is a 33.3% margin, and a 60% margin needs a 150% markup. This calculator shows both at once, so no conversion is needed.
What price do I need for a target margin?
Divide the cost by one minus the target margin as a decimal: price = cost ÷ (1 − margin). For a 70% margin on an item costing 20, the price is 20 ÷ 0.30 = 66.67. Never add the target margin to the cost as a percentage — that gives a markup, and the margin lands short.
Should the figures include VAT or sales tax?
No. Use prices and costs excluding VAT or sales tax. Tax you collect is not revenue and reclaimable tax you pay is not a cost, so including either distorts the margin. If your price is tax-inclusive, remove the tax first.
What belongs in the cost figure?
The costs that rise with each unit sold: materials or wholesale price, packaging, inbound shipping, and per-sale payment or marketplace fees. Rent, software and salaries are fixed costs — they do not belong in a gross margin, they are covered by the gross profit it produces.
Can a profit margin be more than 100%?
No. Margin is a share of the selling price, so the most it can ever be is 100%, which would mean the item cost nothing. Markup has no ceiling: an item costing 1 and sold for 101 is a 10,000% markup but still only a 99% margin.