Profit Margin Calculator | Free Profit & Markup Calculator
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Profit Margin Calculator

Use our free profit margin calculator to instantly find your profit margin, markup percentage, and net profit on any product or service. No sign-up required.

FreeAlways free to use
InstantResults in seconds
3 metricsMargin, markup & profit
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Infographic showing how a profit margin calculator works with revenue, cost, and profit breakdown
Calculate your profit margin
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Profit Margin
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% of selling price
Markup
—
% above cost price
Profit per Unit
—
selling price − cost
Total Net Profit
—
based on units sold
Revenue (selling price × units)
—
Total cost (cost × units)
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How to use this profit margin calculator

Getting your profit margin takes just seconds. Our profit margin calculator gives you three essential metrics in one click — margin, markup, and total profit.

1

Enter the cost price — what it costs you to make or buy the product.

2

Enter the selling price — what you charge your customers per unit.

3

Enter units sold — optionally, to see your total revenue and net profit.

4

Hit Calculate to instantly see your margin, markup, and profit figures.

What is profit margin?

Profit margin is a key financial metric that shows how much of your revenue you actually keep as profit after covering costs. In other words, our profit margin calculator tells you what percentage of every dollar earned is genuine profit — not just revenue.

For example, a 40% profit margin means that for every $100 you bring in, $40 is profit and $60 goes toward costs. Therefore, the higher your margin, the more efficiently your business converts revenue into profit.

Gross vs net profit margin

There are two main types of profit margin you should understand:

  • Gross profit margin — this is what our profit margin calculator measures. It shows profit after subtracting the direct cost of goods sold (COGS), before operating expenses like rent, salaries, and marketing.
  • Net profit margin — this is profit after ALL expenses including taxes, interest, and overheads. As a result, net margin is always lower than gross margin and gives a fuller picture of business health.

For product-based businesses and e-commerce stores, gross profit margin is the most useful day-to-day metric for pricing decisions.

Profit margin calculator formula

Our profit margin calculator uses two standard formulas that every business owner and accountant relies on. Specifically, margin and markup measure the same profit from two different angles:

Profit margin formula

Profit Margin % = ((Selling Price − Cost) ÷ Selling Price) × 100

Margin is expressed as a percentage of the selling price. For instance, on a $100 product that costs $60 to make, the margin is 40%.

Markup formula

Markup % = ((Selling Price − Cost) ÷ Cost) × 100

Markup, on the other hand, is expressed as a percentage of the cost price. On the same product, the markup would be 66.7%. Consequently, markup is always a higher percentage than margin for the same product — which is a common source of confusion.

Example profit margin calculation

To illustrate how our profit margin calculator works, here is a practical example. Suppose you sell a product for $100 that costs you $60 to produce, and you sell 500 units per month:

Cost price per unit$60.00
Selling price per unit$100.00
Profit per unit$40.00
Profit margin40%
Markup percentage66.7%
Monthly revenue (500 units)$50,000
Monthly total cost$30,000
Monthly net profit$20,000

As this example shows, a 40% margin on a product sounds solid — but the real power of the profit margin calculator is seeing how those percentages translate into actual dollar profit at scale.

What is a good profit margin?

A "good" profit margin depends heavily on your industry. Furthermore, what is considered healthy in e-commerce may be razor-thin in grocery retail. As a general benchmark, a gross profit margin above 50% is considered strong for most product-based businesses.

Profit margin benchmarks by industry

E-commerce & Retail

General e-commerce20–45%
Shopify stores25–40%
Fashion & apparel40–60%
Electronics5–15%
Grocery / food retail2–5%

Services & Digital

Software (SaaS)60–80%
Digital products70–90%
Consulting30–60%
Freelance services50–75%
Marketing agencies25–40%

Physical Products

Handmade / Etsy40–65%
Wholesale15–30%
Manufacturing10–25%
Dropshipping10–30%
Print on demand20–40%

Rule of thumb — if your gross profit margin is below 20%, review your pricing or reduce your cost of goods. Most sustainable businesses target at least 30% gross margin.

Tips to improve your profit margin

If your profit margin calculator result is lower than you would like, there are two main levers you can pull — increase your revenue or reduce your costs. Here are the most effective strategies:

Increase your selling price

  • Test price increases gradually — even a 5–10% price increase on a product with strong demand can significantly improve your margin without hurting volume.
  • Add value to justify higher prices — better packaging, faster delivery, or a stronger brand story can support premium pricing.
  • Bundle products — selling items together at a slight premium increases average order value and overall margin.

Reduce your cost of goods

  • Negotiate with suppliers — as your order volume grows, you have more leverage to negotiate better unit costs. Even a 5% reduction in COGS has a direct impact on your margin.
  • Reduce packaging and shipping costs — these are often overlooked components of COGS that erode margin significantly at scale.
  • Eliminate low-margin products — use our profit margin calculator to identify which products are dragging down your overall margin and consider discontinuing or repricing them.

Learn more from trusted business resources:

Investopedia — Profit Margin Explained SBA.gov — Managing Business Finances

Related tools on WebTools:

Shopify Pricing Plan Comparator — Find the right Shopify plan Product Pricing Calculator — Set the right price for your products Closing Costs Estimator — Calculate your home closing costs

Frequently asked questions about profit margin calculators

What is the difference between profit margin and markup?+
Both measure the same profit but from different perspectives. Profit margin is calculated as a percentage of the selling price, while markup is calculated as a percentage of the cost price. For example, if a product costs $60 and sells for $100, the margin is 40% but the markup is 66.7%. As a result, markup is always a higher number than margin for the same product — which often causes confusion when pricing products.
What is a good profit margin for an e-commerce store?+
For most e-commerce businesses, a gross profit margin between 20% and 45% is considered healthy. However, this varies significantly by product type. Digital products and software can achieve margins of 70–90%, while physical goods with high shipping costs may sit closer to 15–25%. Use our profit margin calculator to benchmark your products and identify which ones are performing best.
How do I calculate profit margin manually?+
To calculate profit margin manually, subtract your cost from your selling price to get the profit, then divide that profit by the selling price and multiply by 100. For example: ($100 − $60) ÷ $100 × 100 = 40% margin. Alternatively, use our profit margin calculator above to get your margin, markup, and total profit instantly without doing the math yourself.
Should I use margin or markup when pricing products?+
It depends on your industry and accounting approach. Retailers and e-commerce stores typically use margin because it relates directly to revenue — it tells you what percentage of your income is profit. Manufacturers and wholesalers often use markup because they start from cost and build up. Bear in mind that using markup without understanding margin can lead to underpricing — always verify both figures using our profit margin calculator before finalizing your prices.
Why is my profit margin low even though I have high sales?+
High revenue does not automatically mean high profit. If your cost of goods is too high relative to your selling price, your margin will remain low regardless of volume. Furthermore, hidden costs like shipping, packaging, payment processing fees, and returns can erode margin significantly. Use our profit margin calculator to model different cost and price scenarios and identify exactly where your margin is being squeezed.
Does the profit margin calculator account for taxes?+
No — our profit margin calculator calculates gross profit margin based on cost and selling price only. It does not account for taxes, operating expenses, salaries, or overheads. The result therefore represents your gross margin, not your net margin. To calculate net profit margin, you would need to subtract all additional business expenses from the gross profit figure shown by the calculator.
This profit margin calculator is for informational purposes only. Results are based on the cost and selling price inputs provided and represent gross profit margin only. They do not account for taxes, operating expenses, or other business costs. Always consult a financial professional for comprehensive business financial planning.
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