Free Profit Margin Calculator
Go beyond a simple margin calculation. Enter cost and revenue to see gross margin %, markup %, net margin (with operating expenses and taxes), ROI, and a visual revenue breakdown. Use the reverse modes to answer: "If I want a 40% margin, what should I charge?" — or "If I want a 60% markup, what's the price?" All in your browser, no signup.
Inputs
What you paid to produce or acquire it
What you charge the customer
Rent, salaries, marketing, etc.
Estimated tax on profit
Gross Profit
$50.00
Gross Margin
50.00%
Profit ÷ Revenue
Markup
100.00%
Profit ÷ Cost
ROI
100.00%
Return on cost
Revenue Breakdown
Margin = Profit ÷ Revenue. A 40% margin means 40 cents of every dollar earned is profit.
Markup = Profit ÷ Cost. A 67% markup means you charge 67% more than what it cost you.
Same numbers, different bases. They are NOT interchangeable — a 50% margin ≠ a 50% markup.
All calculations run in your browser. No data is sent to any server.
Frequently Asked Questions
What is the difference between profit margin and markup?+
Profit margin (gross margin) is profit divided by revenue: if you buy for $50 and sell for $100, your margin is 50%. Markup is profit divided by cost: the same numbers give a 100% markup. They measure the same profit from different bases. This is why they are NOT interchangeable — a 50% margin is NOT the same as a 50% markup. A 50% margin corresponds to a 100% markup, and a 50% markup corresponds to a 33.3% margin.
What is a good gross profit margin?+
It depends heavily on the industry. Software and SaaS: 70–90% gross margin. Consulting and professional services: 60–80%. Retail (physical goods): 30–50%. Manufacturing: 25–45%. Restaurants: 60–70% gross (but net margins are only 3–9% after labor and overhead). A "good" margin is one that covers your operating expenses and generates enough net profit to sustain and grow the business.
What is the difference between gross margin and net margin?+
Gross margin only subtracts the direct cost of goods sold (COGS) — what it costs to produce or acquire the product. Net margin subtracts all costs: COGS plus operating expenses (rent, salaries, marketing, utilities) plus taxes and interest. A business can have a 70% gross margin but a 5% net margin if overhead is very high.
How do I use the reverse margin calculator?+
Enter your cost and the target gross margin percentage you want to achieve. The calculator solves for the required selling price. Example: cost = $30, target margin = 50% → required selling price = $60. The formula is: Price = Cost ÷ (1 − margin%). Note: a margin of 100% or higher is mathematically impossible with a positive cost.
How is markup different from margin in practice?+
Retailers and wholesalers typically think in markup: "I'll mark this item up by 50% over my wholesale cost." Service businesses and SaaS companies typically think in margin: "We need a 70% gross margin to cover salaries." Finance teams almost always use margin when analyzing profitability. Both are useful — the key is to be consistent and never confuse the two when pricing or modeling.
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Profit Margin vs. Markup — The Most Confused Numbers in Business
Profit margin and markup are both ways to express the relationship between cost and profit, but they use different denominators — and confusing the two is a classic pricing mistake. Margin uses revenue as the base; markup uses cost. A product that costs $40 and sells for $100 has a 60% gross margin and a 150% markup. Using markup percentage where margin percentage is expected (or vice versa) can lead to systematically underpricing your products.
Gross Margin vs. Net Margin
Gross margin only subtracts direct costs (COGS). Net margin subtracts everything: COGS, operating expenses (rent, salaries, marketing, SaaS tools), interest, and taxes. A business can look profitable at the gross level but be losing money at the net level if overhead is too high. Both metrics matter — gross margin tells you about the fundamental economics of your product, while net margin tells you whether the business as a whole is profitable.
Using the Reverse Calculators for Pricing
The reverse calculators answer the practical question every product-based business faces: given a cost and a target margin (or markup), what price should I charge? Example: if your product costs $35 to produce and you need a 60% gross margin to cover overhead and generate profit, the required selling price is $35 ÷ (1 − 0.60) = $87.50. Trying to set that price by adding 60% to the cost would give you $56.00 — far less than what you need.