What is the difference between profit margin and markup?

Profit margin is profit divided by selling price × 100. Markup is profit divided by cost × 100. A 50% markup gives a 33.3% margin — they are different percentages of different bases. Use margin for financial reporting and markup for pricing decisions.

What is a good profit margin for a small business?

This varies by industry. Retail typically targets 10–30% gross margin. Software and services aim for 60–80%. Food businesses often run at 20–35%. The key number is net margin after all expenses — a 5–10% net margin is considered healthy for most small businesses.

How do I find the selling price if I know cost and desired margin?

Selling Price = Cost ÷ (1 − Margin %). For a 40% margin on a ₹600 cost: ₹600 ÷ 0.60 = ₹1,000 selling price. Use the reverse-calculate mode in this tool to get this directly.

Does this calculate gross or net margin?

The calculator shows gross margin (revenue minus cost of goods sold). Net margin requires subtracting all operating expenses, taxes, and interest — enter those in the additional costs field if available.

Can I use this for service-based businesses?

Yes. For services, use your hourly rate or project cost as the 'cost' input and the client billing rate or project fee as the 'selling price' to find your margin on each engagement.

Profit Margin Calculator – Gross Margin, Markup & Selling Price

Calculate gross profit margin, markup percentage, and net profit from cost and selling price. Or reverse-calculate: enter cost and desired margin to find the required selling price. Built for small business owners, freelancers, and product teams.

Profit Margin Calculator

Calculate margin & markup from revenue and cost

RevenueCost

Revenue from Desired Margin

How much should you charge to hit a target margin?

CostDesired Margin%

Price from Markup %

Calculate selling price based on cost and markup percentage

CostMarkup%

Gross & Net Margin

Revenue minus COGS = gross; minus operating expenses = net

RevenueCOGSOperating Expenses

Profit Margin Formulas

Profit Margin

(Revenue − Cost) ÷ Revenue × 100

e.g. ($150 − $100) ÷ $150 = 33.3%

Markup

(Revenue − Cost) ÷ Cost × 100

e.g. ($150 − $100) ÷ $100 = 50%

Revenue from Margin

Cost ÷ (1 − Margin ÷ 100)

e.g. $100 ÷ (1 − 0.30) = $142.86

Net Margin

(Revenue − COGS − Expenses) ÷ Revenue × 100

e.g. ($500 − $200 − $100) ÷ $500 = 40%

📊

Margin vs Markup

Margin is profit as % of revenue. Markup is profit as % of cost. A 50% markup = 33.3% margin.

💼

Business Ready

Calculate gross and net margins with COGS and operating expenses to understand true profitability.

🔒

100% Private

All calculations run in your browser. No data is sent to any server.

When to Use a Profit Margin Calculator

Pricing a product or service

Enter your cost and target profit margin to find the minimum selling price needed to hit your margin goal.

Checking profitability of existing products

Enter cost and selling price to instantly see gross margin, markup percentage, and net profit amount.

Comparing margin vs. markup

Understand the difference between margin (profit as % of revenue) and markup (profit as % of cost) to price correctly.

How to Calculate Profit Margin

Enter cost price

Provide the cost of producing or acquiring the product or service.

Enter selling price

Provide the price at which you sell the product or service.

View margin and markup

See gross profit, gross margin %, markup %, and net profit instantly.

Reverse-calculate

Or enter cost and desired margin to find the required selling price.

Markup vs. Margin: Why the Difference Matters for Pricing

Markup and margin are both expressed as percentages but are calculated from different bases, which is why confusing them leads to systematic under-pricing. Markup is profit divided by cost: if you pay ₹400 for a product and sell it for ₹600, your markup is (200 ÷ 400) × 100 = 50%. Margin is profit divided by selling price: (200 ÷ 600) × 100 = 33.3%. If you set a target of “30% profit” and interpret this as markup, your actual margin will only be 23%. If your business plan promises investors a 40% margin and you price using a 40% markup, you will miss the target every time. Use margin for finance and investor conversations; use markup to set prices from cost. The conversion formula: Margin = Markup ÷ (1 + Markup).

Profit Margins by Industry in India

Gross profit margins vary widely by industry. Kirana and retail grocery stores typically operate on 10–20% gross margins. Clothing and apparel retail targets 40–60%. Software products and SaaS aim for 70–85% gross margins. Restaurants and food businesses average 20–35% gross margin but net margins of only 3–9% after rent, staff, and utilities. Manufacturing companies vary from 15–40% gross margin depending on the product category. E-commerce in India often runs at very thin margins (5–15% gross) due to high customer acquisition costs and delivery expenses. Understanding your industry benchmark helps you identify whether your pricing is competitive or leaving money on the table.

Frequently Asked Questions

What is the difference between profit margin and markup?: Profit margin is profit divided by selling price × 100. Markup is profit divided by cost × 100. A 50% markup gives a 33.3% margin — they are different percentages of different bases. Use margin for financial reporting and markup for pricing decisions.
What is a good profit margin for a small business?: This varies by industry. Retail typically targets 10–30% gross margin. Software and services aim for 60–80%. Food businesses often run at 20–35%. The key number is net margin after all expenses — a 5–10% net margin is considered healthy for most small businesses.
How do I find the selling price if I know cost and desired margin?: Selling Price = Cost ÷ (1 − Margin %). For a 40% margin on a ₹600 cost: ₹600 ÷ 0.60 = ₹1,000 selling price. Use the reverse-calculate mode in this tool to get this directly.
Does this calculate gross or net margin?: The calculator shows gross margin (revenue minus cost of goods sold). Net margin requires subtracting all operating expenses, taxes, and interest — enter those in the additional costs field if available.
Can I use this for service-based businesses?: Yes. For services, use your hourly rate or project cost as the 'cost' input and the client billing rate or project fee as the 'selling price' to find your margin on each engagement.

Calculators