Profit Margin Calculator
Turn revenue and cost into profit, margin and markup — the three numbers a pricing decision usually hinges on.
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How it works
Margin and markup describe the same profit from two different angles, and confusing them is one of the most common pricing mistakes. Margin expresses profit as a share of the price you charge; markup expresses it as a share of what the item cost you.
Because the denominators differ, markup is always the larger number. A 25% margin is a 33.3% markup on the same pair of figures.
Margin % = (Revenue − Cost) ÷ Revenue × 100 · Markup % = (Revenue − Cost) ÷ Cost × 100
- Revenue — the price you charge, excluding sales tax
- Cost — what the goods or service cost you to deliver
- Profit — revenue minus cost
Worked example
Selling an item for 200 that costs you 150
Inputs
Results
Applying a 25% markup instead of a 25% margin would have priced the item at 187.50 and cut the profit from 50 to 37.50.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of revenue; markup is profit as a percentage of cost. Markup is always the higher figure. Pricing to a target margin and pricing to the same-numbered markup give different prices.
Is this gross or net margin?
It depends on the cost you enter. Enter only direct costs and you get gross margin; include overheads, salaries and other operating costs and you get net margin.
Should I include sales tax, VAT or GST?
No. Use figures excluding tax. Sales tax is collected on behalf of the government and is not revenue, so including it overstates your margin.
What does a negative margin mean?
Your cost exceeds your revenue — you are losing money on each sale. The calculator shows this as a negative profit and a negative margin percentage rather than hiding it.
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