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Profit Margin Calculator

Calculators · Added 15 August 2026

Margin and markup describe the same profit against different bases, and confusing them is the most expensive arithmetic error in small-business pricing. This calculator shows both from any pair of figures you have, and works backwards to the price that hits a target you set.

What do you know?

What the item costs you.

What the customer pays.

How to use the profit margin calculator

  1. 1Pick what you already know — cost and price, or a target you are pricing towards.
  2. 2Enter the cost price: what the item costs you, landed.
  3. 3Enter the selling price, or the target margin or markup percentage.
  4. 4Press Calculate. Margin and markup are shown side by side so the gap between them is visible.
  5. 5Check the profit per unit underneath — it is the figure that actually pays your overheads.

Examples

The classic confusion

Input
Cost ₹100, selling price ₹150
Result
Markup 50.00% but margin only 33.33%

Adding half the cost does not give you half the revenue as profit. This one distinction ruins more pricing than any other.

Pricing for a target margin

Input
Cost ₹60, target margin 40%
Result
Sell at ₹100 — which is a 66.67% markup

Price = cost ÷ (1 − margin). Dividing, not multiplying, is what people get wrong here.

Why 100% margin is impossible

Input
Cost ₹100, target margin 100%
Result
Rejected — it would require a selling price of infinity

Margin is capped below 100% by definition. Markup has no ceiling, which is why 200% markup is perfectly ordinary.

About the profit margin calculator

Why the distinction costs real money

A retailer told to achieve a 40% margin who instead adds 40% to cost ends up with a 28.6% margin — more than a quarter of the intended profit gone, on every unit, invisibly. The error compounds because it looks correct at every step: the arithmetic is fine, only the base is wrong.

It runs the other way too. A buyer quoted a 60% markup by a supplier and reading it as margin will underestimate the supplier's price and over-plan their own. Since suppliers, distributors and retailers habitually use different conventions, the same product can be described with three different percentages down a supply chain without anyone lying.

The defence is simply to state the base every time. 'Forty percent margin' and 'forty percent on cost' are unambiguous; 'forty percent profit' is not, and the moment it appears in an email someone is going to price something wrong.

What a margin figure does and does not tell you

Gross margin measures one thing well: how much each sale contributes towards everything that is not the cost of the goods. That makes it the right number for pricing decisions, for comparing products within a range, and for working out whether a discount is survivable.

It is a poor measure of business health on its own, because it is silent about volume and about fixed costs. A 70% margin on four sales a month is a hobby; a 12% margin on high volume is a supermarket. This is why margin belongs next to a break-even calculation rather than in isolation — the two together tell you both how much each sale earns and how many you need.

The other thing margin hides is the discount arithmetic. Cutting the price by 10% does not reduce profit by 10%; on a 33% margin it removes almost a third of the profit on every unit sold, because the discount comes entirely out of the margin rather than being shared with the cost. Working that out before agreeing a promotion is usually more valuable than the promotion.

Frequently asked questions

What is the difference between margin and markup?
The same profit divided by different things. Margin is profit ÷ selling price; markup is profit ÷ cost. On a ₹100 item sold for ₹150 the profit is ₹50 either way, but that is 33.3% of the price and 50% of the cost. Suppliers usually quote markup and accountants usually mean margin, which is exactly how the two get mixed up in a single conversation.
Why can margin never reach 100%?
Because margin measures profit as a share of the selling price, and profit can only equal the whole price if the cost is zero. A 100% margin would need an infinite price for any real cost. Markup has no such limit — it divides by cost, so a ₹10 item sold at ₹40 is a perfectly ordinary 300% markup and a 75% margin.
Is this gross or net margin?
Gross. It compares the selling price against the direct cost of the goods only. Net margin subtracts everything else — rent, wages, marketing, payment processing fees, tax — and is always lower, often dramatically so in retail. A healthy gross margin says nothing on its own about whether the business is profitable.
How do I convert one to the other?
Margin = markup ÷ (100 + markup), and markup = margin ÷ (100 − margin), both as percentages. Some useful anchors: 25% markup is a 20% margin, 50% markup is 33.3%, 100% markup is 50%, and 300% markup is 75%. The calculator shows both at once so you never have to do it by hand.

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