Profit Margin Calculator
Calculate profit, margin and markup from cost and revenue in one step.
About this calculator
Margin and markup sound similar and are often confused, even by experienced operators. They’re not the same number. This calculator gives you both at once so you can price products correctly, evaluate suppliers, and never under-quote a project by accident.
How it works
Profit is simply revenue minus cost. Margin expresses profit as a share of revenue — how much of every unit of revenue you actually keep. Markup expresses profit as a share of cost — how much you’ve added on top of what something costs you.
A 50% markup is NOT a 50% margin. If something costs 100 and you sell it for 150, the markup is 50% but the margin is only 33.3% because the profit (50) is a third of the revenue (150).
Pricing using markup is easy to reason about in your head, but margin is the right number to track in management accounting because it tells you how much each dollar of sales contributes to fixed costs and profit.
Be careful which costs you include. Gross margin uses only the direct cost of goods sold. Operating margin further subtracts overhead. Net margin subtracts everything including tax. Mixing them up makes year-on-year comparisons meaningless.
Formula
profit = revenue − cost
margin = profit / revenue × 100
markup = profit / cost × 100Examples
80 cost, 100 sale
Selling for 100 something that cost 80 gives you a 20% margin and a 25% markup. The two numbers describe the same profit but measure it against different denominators.
Result: Profit 20 — Margin 20% — Markup 25%
Doubling the price
Doubling the price turns a 20% margin into a 60% margin — but only if customers will still buy at the higher price.
Result: Profit 120 — Margin 60% — Markup 150%