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Profit Margin Calculator

Ensure you're pricing your products profitably. Calculate margin, markup, and gross profit in seconds.

Calculator
$
$

Gross Profit

$50.00

Gross Margin

50.00%

Markup

100.00%

Cost
Profit

Markup vs. Margin: What's the Difference?

Many business owners use these terms interchangeably, but they represent very different financial metrics:

  • Margin: Calculated based on the selling price. (Profit / Revenue)
  • Markup: Calculated based on the cost. (Profit / Cost)

For example, if a product costs $10 and you sell it for $15, your markup is 50% ($5 profit / $10 cost). However, your margin is only 33.3% ($5 profit / $15 revenue).

Why Margin is Crucial for Pricing

Gross profit margin tells you how much of every dollar of sales you keep after direct costs. Understanding this is essential for ensuring you can cover indirect costs like rent, marketing, and salaries while still remaining profitable.

Common Industry Profit Margins

Profit margins vary widely by industry. For example:

  • Retail: 5-10%
  • Restaurants: 3-9%
  • SaaS (Software): 70-80%
  • Consulting: 15-30%