Profit Margin Calculator
Calculate profit margin, markup percentage, and selling prices instantly. Perfect for pricing products, quoting services, and analysing business profitability.
Profit margin = ((Revenue - Cost) / Revenue) × 100. Markup = ((Revenue - Cost) / Cost) × 100. A 50% markup equals a 33.3% margin.
Enter your numbers below to calculate margin, markup, and profit.
Profit Margin Formulas
- Margin: ((Revenue - Cost) ÷ Revenue) × 100
- Markup: ((Revenue - Cost) ÷ Cost) × 100
- Selling Price: Cost ÷ (1 - Margin %)
Margin vs Markup: The Distinction That Costs Businesses Thousands
Margin and markup both measure profit — but from different angles. Confusing them is one of the most expensive mistakes in business pricing. If you set a 50% "profit margin" when you actually meant 50% markup, you'll overprice your products by a third.
Margin is profit as a percentage of the selling price. It answers: "Of every pound I receive, how much is profit?" A 30% margin on a £100 sale means £30 profit.
Markup is profit as a percentage of the cost. It answers: "How much did I add on top of my cost?" A 50% markup on a £100 cost means you sell for £150.
Here's the relationship that trips people up: a 50% markup equals only a 33.3% margin. And a 50% margin requires a 100% markup — you'd need to double your cost price.
Markup to Margin Conversion Table
| Markup % | Margin % | On £100 Cost | Profit |
|---|---|---|---|
| 15% | 13.0% | Sells for £115 | £15 |
| 25% | 20.0% | Sells for £125 | £25 |
| 50% | 33.3% | Sells for £150 | £50 |
| 75% | 42.9% | Sells for £175 | £75 |
| 100% | 50.0% | Sells for £200 | £100 |
| 200% | 66.7% | Sells for £300 | £200 |
What this means for you: Margin is always lower than markup for the same profit amount. That's because margin divides by revenue (a larger number), while markup divides by cost (a smaller number). When someone quotes you a "margin," check which definition they're using.
Typical Profit Margins by Industry
| Industry | Typical Gross Margin | Typical Net Margin | Why |
|---|---|---|---|
| Software / SaaS | 70–90% | 15–30% | Near-zero marginal cost per user |
| Consulting | 50–70% | 15–25% | Main cost is labour (people) |
| Manufacturing | 25–40% | 5–10% | Raw materials + equipment costs |
| Retail (general) | 25–50% | 2–5% | High overheads, thin margins on volume |
| Restaurants | 60–70% | 3–9% | High food cost + rent + labour |
| Supermarkets | 25–30% | 1–3% | Massive volume, razor-thin margins |
What this means for you: "Good" margin depends entirely on your industry. A 5% net margin is excellent for a supermarket but disastrous for a SaaS company. Compare yourself to your sector, not to businesses in completely different markets.
Gross Margin vs Net Margin vs Operating Margin
Gross Margin
Revenue minus direct costs of goods sold (COGS). Includes materials, production labour, and shipping. Ignores overheads like rent, marketing, and admin. This is what the calculator above computes.
Operating Margin
Gross profit minus operating expenses (rent, salaries, marketing, utilities). Shows how efficiently your core business runs before interest and tax. Also called EBIT margin.
Net Margin
The bottom line — what's left after ALL expenses including tax, interest, depreciation, and one-off costs. This is the truest measure of profitability, but also the most volatile.
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How to use this tool
Select your calculation mode: Cost + Revenue, Cost + Margin, or Revenue + Margin
Choose your currency from the dropdown
Enter the values you know
Common uses
- Setting product prices with target profit margins
- Converting between markup and margin percentages
- Comparing profitability across different products or services
- Quoting project costs with desired margin built in
- Analysing whether a business or product line is profitable
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