Profit Margin Calculator

Find the margin and markup on a sale, or the price you need to charge to hit a target margin.

What do you know?

Cost per unit

₹

What it costs you to make or buy.

Selling price

₹

Profit margin

40.00%

₹400.00 profit on a ₹1,000.00 sale.

Cost: ₹600.00
Selling price: ₹1,000.00
Profit: ₹400.00
MarginProfit as a share of the selling price: 40.00%
MarkupProfit as a share of the cost: 66.67%

How this is calculated

Margin = (Price − Cost) ÷ Price × 100. Markup = (Price − Cost) ÷ Cost × 100. They are not the same number, and mixing them up is how prices end up too low.

What this tool does

Margin and markup are both profit expressed as a percentage, but against different bases. Margin measures profit against the selling price; markup measures it against the cost. A 50% markup is a 33.3% margin, and treating them as interchangeable is one of the more expensive arithmetic mistakes a small business can make.

Both are shown together for exactly that reason. The second mode works the other way round: give it a cost and the margin you need, and it returns the price that produces it.

When you might need it

Setting a price: You know what something costs and what margin the business needs to run on.
Reviewing a quote before sending it: Confirming the number you are about to send leaves enough on the table.
Deciding whether a discount is affordable: Seeing what a reduction does to the margin before agreeing to it.
Comparing products: Two items can carry very similar prices and very different margins.

Common workplace uses

Pricing a new product: Work from cost and a target margin to the price on the list.
Approving a discount request: Check the margin at the discounted price before saying yes.
Reviewing supplier costs: See what a cost increase does to margin if the price stays fixed.
Preparing a proposal: Confirm a project priced as a fixed fee still clears the margin it needs to.

How to use it

Choose what you know
Cost and price gives you the margin. Cost and target margin gives you the price.
Enter the cost per unit
What it costs you to make, buy or deliver one unit — include everything variable that you can attribute.
Enter the price or the target
Either the price you charge, or the margin percentage you want to achieve.
Read margin and markup together
Both are shown so the difference is visible rather than assumed.

Practical tips

Margin and markup are not the same number: Margin divides profit by price; markup divides it by cost. Buy at 60 and sell at 100 and you have a 40% margin and a 66.7% markup. Applying a markup when you meant a margin underprices the sale.
A 100% margin is impossible: It would require an infinite price. Markup, by contrast, has no upper limit. If a target margin is rejected here, that is why.
Decide which costs belong in "cost": Gross margin usually counts only direct costs. Including overheads gives a different and lower figure — useful, but do not compare it against a gross margin benchmark.
Discounts hit margin harder than they look: On a 40% margin, a 10% discount removes a quarter of the profit, because the discount comes entirely out of the margin.
Percentages hide the amount: A high margin on a cheap item can be less money than a thin margin on an expensive one. The profit figure is shown alongside for that reason.

Common 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. Cost 60, price 100: margin 40%, markup 66.7%. Both are shown here so they cannot be confused.

How do I price for a specific margin?

Switch to the cost and target margin mode. Price = Cost ÷ (1 − Margin ÷ 100). For a 40% margin on a ₹60 cost, that is ₹100.

Why is a 100% margin rejected?

The formula divides by (1 − margin ÷ 100). At 100% that is a division by zero, meaning no finite price achieves it. Margins must stay below 100%.

What if I am selling at a loss?

It reports a negative profit and a negative margin rather than hiding it. That is usually the number you need to see.

Should cost include overheads?

That depends what you are measuring. Gross margin conventionally uses direct costs only. Including overheads gives a net figure, which is valid but not comparable to a gross margin benchmark.