Profit margin calculator
Enter what something costs you and what you sell it for — or the margin you want — and get margin, markup and profit instantly. Scroll down for the break-even calculator.
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Margin vs markup: the difference that matters
Both describe the same profit, measured against different things. Margin compares profit to the selling price. Markup compares profit to the cost. Buy something for $40, sell it for $65, and your $25 profit is a 38.5% margin but a 62.5% markup.
Mixing the two up is one of the most common pricing mistakes in small businesses. If you want a 40% margin and add 40% to your cost, you actually end up with a 28.6% margin. We unpack why in profit margin vs markup.
The formulas
- Profit = price − cost
- Margin % = profit ÷ price × 100
- Markup % = profit ÷ cost × 100
- Price from margin = cost ÷ (1 − margin)
- Price from markup = cost × (1 + markup)
- Margin from markup = markup ÷ (1 + markup); markup from margin = margin ÷ (1 − margin)
Markup to margin conversion table
| Markup | Margin | Price on a $10 cost |
|---|---|---|
| 25% | 20% | $12.50 |
| 33.3% | 25% | $13.33 |
| 50% | 33.3% | $15.00 |
| 66.7% | 40% | $16.67 |
| 100% | 50% | $20.00 |
| 150% | 60% | $25.00 |
| 200% | 66.7% | $30.00 |
| 300% | 75% | $40.00 |
Setting a price from a target margin
Switch to "Cost + target margin" and the calculator divides your cost by (1 − margin). A $40 item at a 40% target margin needs a price of $40 ÷ 0.6 = $66.67. Remember that "cost" here should be your full cost to land the product: purchase price, shipping in, packaging and payment fees. Leaving those out is how a 40% margin on paper becomes 25% in the bank. For a full pricing method, see cost-plus pricing; for benchmarks by industry, see what's a good profit margin?
How the break-even calculator works
Break-even is the number of units you need to sell to cover your fixed costs (rent, software, salaries) before you make any profit:
Break-even units = fixed costs ÷ (price − variable cost per unit)
The bit in brackets is the contribution margin: what each sale contributes toward fixed costs. With $3,000 of monthly fixed costs and a $25 contribution per unit, you need 120 sales a month to break even. Every sale after that is profit. The worked examples in how to calculate a break-even point show how price changes move that number.
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. The same sale always has a higher markup than margin, for example a 50% markup equals a 33.3% margin.
How do I calculate profit margin?
Subtract cost from selling price to get profit, then divide profit by selling price and multiply by 100. Selling at $65 with a $40 cost gives $25 ÷ $65 = 38.5% margin.
How do I price a product for a 40% margin?
Divide the cost by 0.6 (that's 1 − 0.40). A $30 cost needs a price of $50 for a 40% margin.
What is a good profit margin?
It depends heavily on the industry. Retail and restaurants often run on thin net margins, while software and services can be much higher. Compare against businesses like yours rather than a single number.
How do I calculate break-even point?
Divide fixed costs by the contribution margin per unit (price minus variable cost). The result is how many units you must sell to cover fixed costs.
For general information only, not accounting or tax advice. Include every cost of getting a product to your customer for an accurate margin.