Profit Margin & Markup Calculator
Turn cost and price into your real profit, margin, and markup — and see the difference.
Your numbers
Profit per unit
Profit margin
40.0%
of the selling price
Markup
66.7%
on top of cost
- Cost
- $60.00
- Selling price
- $100.00
- Profit
- $40.00
Margin and markup describe the same profit from two different angles — and confusing them is one of the most expensive mistakes in pricing. A "50% markup" sounds like a "50% margin," but it isn't: it's a 33% margin. This guide makes the difference concrete and shows how to price for the margin you actually want.
Profit, margin, and markup
Start with one sale where something costs you $60 and you sell it for $100:
- Profit = price − cost = $40
- Margin = profit ÷ price = 40 ÷ 100 = 40%
- Markup = profit ÷ cost = 40 ÷ 60 = 66.7%
Same $40 of profit — but margin measures it against the selling price, while markup measures it against the cost. Markup is always the bigger-looking number.
Why this matters
Suppose you want a 40% margin and you "add 40%" to your cost as a markup. On a $60 item that gives a $84 price — but $24 profit on an $84 sale is only a 28.6% margin, well short of your target. Repeat that across a catalogue and you've systematically underpriced everything.
Converting between margin and markup
| Markup | Equivalent margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 66.7% | 40% |
| 100% | 50% |
| 200% | 66.7% |
To hit a target margin, the markup you need is always higher than the margin itself. The formula to price for a target margin is:
Price = cost ÷ (1 − margin)
For a 40% margin on a $60 cost: 60 ÷ (1 − 0.40) = 60 ÷ 0.60 = $100. That's why the example above lands exactly on $100.
Gross margin isn't net margin
The margin in this calculator is a gross margin — price minus the direct cost of the item. Your net margin is lower, because it also absorbs platform fees, shipping, ads, returns, and overhead. If you sell on a marketplace, run the price through the relevant fee calculator (Shopify, Amazon, Etsy, eBay) to see the margin that actually reaches your bank account.
What is a good profit margin?
It depends entirely on the business. Grocery and electronics run on thin single-digit margins and win on volume; software and digital products can exceed 80%. For physical-product e-commerce, a healthy gross margin is often 40–60%, leaving room for fees, marketing, and a net profit after everything. Use the calculator to test prices until the margin supports your real costs.
The bottom line
Margin is profit as a share of the price; markup is profit as a share of the cost. To price for a target margin, divide cost by (1 − margin) — never just add the margin percentage as a markup. Enter your cost and price above to see all three numbers at once, then sanity-check the net margin after fees.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. On a $60 item sold for $100, the $40 profit is a 40% margin but a 66.7% markup — same profit, different base.
How do I calculate profit margin?
Profit margin = (selling price − cost) ÷ selling price × 100. For a $60 cost sold at $100: (100 − 60) ÷ 100 = 40%. The calculator above does this instantly and also shows the markup.
What is a 50% markup as a margin?
A 50% markup equals a 33.3% margin. Markup is measured against cost, so it always looks larger than the equivalent margin. This is exactly the confusion that leads sellers to underprice.
How do I price for a target margin?
Use price = cost ÷ (1 − margin). For a 40% margin on a $60 cost: 60 ÷ (1 − 0.40) = 60 ÷ 0.60 = $100. Don’t just add the margin percentage as a markup — you’ll fall short of the target.
What is a good profit margin?
It varies by industry. Groceries and electronics run thin (single digits) and win on volume; software can top 80%. For physical-product e-commerce, a gross margin of 40–60% is generally healthy, leaving room for fees, ads, and a net profit.
Is this gross margin or net margin?
This is gross margin — selling price minus the direct cost of the item. Your net margin is lower because it also absorbs platform fees, shipping, ads, returns, and overhead. Run the price through a marketplace fee calculator to see the net margin.
Can margin be more than 100%?
No. Margin is a share of the selling price, so it maxes out below 100% (you can only ever keep up to the full price). Markup, however, can exceed 100% — a $10 cost sold for $30 is a 200% markup but a 66.7% margin.
How do I increase my profit margin?
Raise prices where the market allows, lower your unit cost through better sourcing or volume, reduce fees by choosing the right sales channel, cut returns, and increase average order value so fixed costs spread across more revenue.