Money
Profit Margin Calculator
Price what you sell knowing how much you really make
With this profit margin calculator you see how much you make on the selling price, or what price to set to reach the margin you want. For stores, small businesses and resellers.
The key idea
Margin is not markup: it is what you keep from the price
If you buy at $40 and sell at $60, your markup is 50%, but your margin is 33.3%. Mixing them up makes you think you earn more than you do: adding 40% to the cost gives a 28.6% margin, not 40%.
How it is calculated
Margin = (Price − Cost) / Price. Markup = (Price − Cost) / Cost. They are not the same: a 50% markup is a 33.3% margin.
Price for a margin m = Cost / (1 − m)
Work out the margin before sales tax: the sales tax you collect is not yours, you pass it on to the state.
Worked example
You buy at $40 and sell at $60: profit $20, margin 33.3%, markup 50%. For a 40% margin on a $40 cost: 40 / 0.6 = $66.67.
Typical cases
Margin vs markup chart
The selling price you need for each target margin on a $100 cost, and the markup that gives it. A 50% margin is a 100% markup, not 50%.
| Margin | Price on a $100 cost | Profit | Markup on cost |
|---|---|---|---|
| 10% | $111.11 | $11.11 | 11.1% |
| 15% | $117.65 | $17.65 | 17.6% |
| 20% | $125.00 | $25.00 | 25.0% |
| 25% | $133.33 | $33.33 | 33.3% |
| 30% | $142.86 | $42.86 | 42.9% |
| 35% | $153.85 | $53.85 | 53.8% |
| 40% | $166.67 | $66.67 | 66.7% |
| 50% | $200.00 | $100.00 | 100.0% |
| 60% | $250.00 | $150.00 | 150.0% |
| 75% | $400.00 | $300.00 | 300.0% |
Save or share this table as an image Common questions
Frequently asked questions
What is profit margin?
It is the share of the selling price you keep as profit: (price − cost) / price. If you sell for $60 something that costs you $40, your margin is 33.3%.
What is the difference between margin and markup?
Margin is calculated on the selling price and markup on the cost. A 50% markup equals a 33.3% margin, and a 50% margin requires a 100% markup.
What price do I set for a 30% margin?
Divide the cost by 0.7. With a $40 cost, the price before sales tax is $57.14.
Why is adding a percentage to the cost not enough?
Because adding 40% to the cost gives a 28.6% margin, not 40%. If you think in margin, use the formula cost / (1 − margin).
Do I calculate margin with or without sales tax?
Without it. The sales tax you collect goes to the state, so work out your margin on the price before tax and add the tax afterward.
What goes into the cost?
Everything it takes to put the product up for sale: purchase price, shipping, marketplace or card processing fees and packaging. If you leave one out, your real margin will be lower than the result.
Prices, tax and margins
Money
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