Margin Calculator
Calculate gross profit margin from your cost price and selling price instantly.
Margin Calculator
Enter your cost and selling price to calculate margin.
Margin Breakdown
What Profit Margin Actually Represents
Profit margin shows what percentage of a product's final selling price represents actual profit, after cost has been fully accounted for. This differs meaningfully from markup, which measures the same profit relative to cost rather than selling price, and confusing the two is one of the most common and consequential pricing mistakes small business owners make.
The Margin Formula This Calculator Applies
Margin is calculated as selling price minus cost, divided by selling price, multiplied by 100 to express the result as a percentage. This calculator applies this exact formula the moment you enter your cost and selling price, instantly returning an accurate margin figure without requiring any manual calculation.
Pro Tip: A 50% margin and a 50% markup describe two very different prices — margin is based on selling price, markup is based on cost. Always check which one you're using.
Gross Profit = Selling Price − Cost
Gross Margin (%) = (Gross Profit ÷ Selling Price) × 100
Markup (%) = (Gross Profit ÷ Cost) × 100
Margin is based on selling price; Markup is based on cost — they are different.
How to Use the Margin Calculator
Enter your product cost, representing what it actually costs to produce or acquire the item. Enter your selling price, representing what the customer actually pays. Your margin percentage appears instantly once calculated, ready to compare against industry benchmarks or your own business's target profitability goals.
What Counts as a Healthy Profit Margin
A genuinely healthy profit margin varies considerably by industry, business model, and competitive landscape, but many retail businesses target somewhere in the range of 20 to 30 percent as a general benchmark. Service-based businesses with lower material costs often achieve meaningfully higher margins, while businesses in highly competitive, commoditized markets sometimes operate successfully on considerably thinner margins offset by higher sales volume.
Why Margin Can Turn Negative and What That Means
If a product's selling price falls below its actual cost, the calculated margin becomes negative, directly indicating the business is losing money on every unit sold at that specific price point. Catching a negative margin early through regular calculation, rather than discovering it only after reviewing broader financial statements, allows for quicker pricing correction before the loss compounds significantly.
Frequently Asked Questions
A healthy margin varies by industry, but many retail businesses target somewhere between 20 and 30 percent as a general benchmark, though this figure shifts considerably based on competitive dynamics.
Margin is calculated based on selling price, while markup is calculated based on cost, meaning the same underlying profit figure will always produce two different percentages depending on which measure is used.
Yes, if the selling price is set below the actual cost, the resulting margin becomes negative, which directly indicates the business is losing money on every unit sold at that specific price.
Tracking margin reveals actual profitability rather than just sales volume, since a business can generate strong revenue while still earning very little genuine profit if margins are too thin.
No. Margin is profit divided by selling price. Markup is profit divided by cost. The same dollar profit produces a lower margin percentage than markup percentage, since selling price is always higher than cost.