Profit Margin Calculator
WebToola
Profit Margin Calculator
Calculate gross profit, margin on revenue, and markup on cost. Excludes tax and overhead unless included in your cost.
About the Profit Margin Calculator
The Profit Margin Calculator helps you calculate gross profit, profit margin and markup from an item’s cost and selling price.
Enter the cost and selling price or revenue, and the calculator will show how much gross profit you make, what percentage of the revenue is profit, and how much the selling price is marked up over the cost.
The calculation excludes tax and overhead expenses unless those amounts are already included in the cost you enter.
How to Calculate Profit Margin
Enter the cost followed by the selling price or revenue. The calculator will determine the gross profit, margin percentage and markup percentage.
For example:
Cost: 60
Selling price: 100
The result is:
Gross profit: 40
Margin: 40%
Markup: 66.6666666667%
In this example, selling something for 100 that costs 60 produces a gross profit of 40. That profit represents 40% of the selling price, while the selling price represents a 66.67% markup over the cost.
Profit Margin Formula
Profit margin measures gross profit as a percentage of selling price or revenue.
First, calculate gross profit:
Gross profit = Selling price − Cost
Using the example:
100 − 60 = 40
Then calculate the profit margin:
Profit margin = (Gross profit ÷ Selling price) × 100
Therefore:
(40 ÷ 100) × 100 = 40%
The gross profit is 40, and the profit margin is 40%.
Markup Formula
Markup measures the profit relative to the cost, rather than the selling price.
The formula is:
Markup = (Gross profit ÷ Cost) × 100
For a cost of 60 and selling price of 100:
(40 ÷ 60) × 100 = 66.6667%
So the markup is approximately 66.67%.
This is why margin and markup percentages are different even though they are based on the same cost, selling price and gross profit.
Profit Margin vs. Markup
Profit margin and markup are not the same thing. The key difference is the value used as the denominator.
Profit margin compares profit with selling price or revenue:
Margin = Profit ÷ Revenue × 100
Markup compares profit with cost:
Markup = Profit ÷ Cost × 100
For example, if an item costs 60 and sells for 100, the profit is 40. The margin is 40%, but the markup is approximately 66.67%.
Understanding this distinction is important when setting prices because applying a 40% markup does not produce a 40% profit margin.
What Is Gross Profit?
Gross profit is the difference between the selling price or revenue and the cost entered into the calculator.
For example:
Selling price: 100
Cost: 60
Gross profit: 40
The calculator does not automatically account for taxes, overhead or other expenses. If those costs need to be reflected in the calculation, they must be included in the cost value you enter where appropriate.
Gross profit should therefore not automatically be interpreted as net profit, which can involve additional business expenses.
Frequently Asked Questions
How do I calculate profit margin?
Subtract the cost from the selling price to find gross profit. Divide the gross profit by the selling price and multiply by 100.
For example, if something costs 60 and sells for 100:
((100 − 60) ÷ 100) × 100 = 40%
The profit margin is 40%.
What is the difference between margin and markup?
Margin measures profit as a percentage of the selling price or revenue, while markup measures profit as a percentage of cost.
Because they use different denominators, the percentages are usually different.
Is a 50% markup the same as a 50% profit margin?
No. For example, if an item costs 100 and has a 50% markup, its selling price would be 150. The profit is 50, which produces a profit margin of approximately 33.33%, not 50%.
What is the profit margin if something costs 60 and sells for 100?
The gross profit is 40. Dividing 40 by the selling price of 100 gives a 40% profit margin.
The markup on the original cost is approximately 66.67%.
Does the Profit Margin Calculator include tax and overhead?
Not automatically. The calculator uses the cost value you provide. Tax, overhead and other expenses are excluded unless they are already included in that cost.
Is gross profit the same as net profit?
No. Gross profit in this calculator is the difference between the selling price or revenue and the entered cost. Net profit can account for additional expenses that this calculator does not automatically include.
Does WebToola store the financial values I enter?
No. The Profit Margin Calculator runs in your browser and does not send or save the values you enter.