Enter your cost and price to see profit, margin and markup, or work backwards from a target margin to the price you should charge.
How to use the profit margin calculator
Pick what you already know from the four tabs at the top:
- Cost and price shows your profit, margin and markup on a product you already sell.
- Cost and target margin gives the price you need to hit a margin, say 40%.
- Cost and markup gives the price if you add a set percentage on top of cost.
- Price and target margin tells you the most you can pay for a product and still make your margin. It’s handy when the market sets the price.
Add the number of units if you want total profit for a batch or a month.
Margin vs markup
These two get mixed up all the time, and the mix-up costs money. Both start from the same profit, but they divide by different things.
| Formula | Example: cost 12, price 20 | |
|---|---|---|
| Profit | Price − Cost | 8 |
| Margin | Profit ÷ Price | 8 ÷ 20 = 40% |
| Markup | Profit ÷ Cost | 8 ÷ 12 = 66.7% |
Margin can never reach 100%, because profit can’t be bigger than the price. Markup can go as high as you like.
The classic mistake: you want a 40% margin, so you add 40% to cost. On a 12 cost that gives a price of 16.80, and the margin is only 28.6%. To get a true 40% margin you need to divide: 12 ÷ (1 − 0.40) = 20.
Quick conversion table
| Markup | Margin |
|---|---|
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 66.7% | 40% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
To convert yourself: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin).
The same formulas in Excel
With cost in A2 and price in B2:
Profit: =B2-A2
Margin: =(B2-A2)/B2
Markup: =(B2-A2)/A2To find the price for a target margin in C2 (entered as a percentage):
=A2/(1-C2)Format the margin and markup cells as percentages (Ctrl+Shift+5) so 0.4 shows as 40%.
What counts as cost
Include everything it takes to get one unit into a customer’s hands: the product or materials, inbound shipping, packaging and per-sale fees like card processing or marketplace commission. Leave out fixed costs such as rent and software. Those belong in a break-even calculation instead.
If you sell on Etsy, the fees are complicated enough that our Etsy fee calculator works them out for you.
Frequently asked questions
What is a good profit margin?
It depends heavily on the business. Grocery stores often run on single-digit margins, while handmade goods and digital products commonly aim for 50% or more. Compare yourself with businesses like yours, and make sure the margin covers your fixed costs at the volume you actually sell.
How do I calculate profit margin?
Subtract cost from price to get profit, then divide profit by price. A product that costs 12 and sells for 20 has a profit of 8 and a margin of 8 ÷ 20 = 40%.
Is a 50% markup the same as a 50% margin?
No. A 50% markup gives a 33.3% margin. To get a 50% margin you need a 100% markup, which means doubling the cost.