Margin Calculator
Get your margin calculated instantly, for free.
The Margin Calculator computes profit margin, markup, and selling price from cost and price inputs — helping businesses price products correctly and understand the difference between margin (percentage of selling price) and markup (percentage of cost).
How to Use
- Enter your cost and either price or target margin
- Click Calculate
- View margin, markup, and profit
Frequently Asked Questions
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost — they use different bases and produce different percentages for the same dollar profit.
How do I calculate profit margin?
Subtract the cost from the selling price to get profit, then divide profit by the selling price and multiply by 100: Margin % = (Profit ÷ Selling Price) × 100.
How do I calculate markup?
Divide profit by the cost (not the selling price), then multiply by 100: Markup % = (Profit ÷ Cost) × 100.
What is a good profit margin for a small business?
This varies enormously by industry — retail often runs 20-50% margins, while some service businesses can exceed 50%, and low-margin industries like grocery may run under 5%. Compare against your specific industry benchmarks.
Is this tool free to use?
Yes, completely free with no signup, no limits and no software to install.
Is my data saved anywhere?
No — calculations run in your browser and the values you enter are not stored or sent to a server.
If I want a 30% margin, what markup percentage do I need?
A 30% margin requires roughly a 42.9% markup on cost — margin and markup percentages diverge more as the percentage increases, so they're never numerically equal except at 0%.
How do I set a selling price to hit a target margin?
Divide the cost by (1 minus the target margin as a decimal). For example, for a $50 cost item with a target 40% margin: $50 ÷ (1 - 0.40) = $83.33 selling price.
Does this account for taxes or overhead costs?
This calculator computes basic margin from cost and selling price — it doesn't factor in overhead, taxes, or other business expenses unless you include them in your "cost" input.
Is this useful for e-commerce pricing strategy?
Yes — quickly checking margin percentage on product pricing is a routine task for e-commerce sellers setting competitive, profitable prices.
The Margin Calculator works out your profit margin, markup percentage, and profit amount from a cost and selling price — or works backward to find the selling price needed to hit a target margin.
Margin vs. Markup: The Mistake That Costs Businesses Money
Margin and markup are both percentages describing profit, but they're calculated from different bases and are not interchangeable — confusing them is one of the most common and costly pricing mistakes a business can make. Margin is profit as a percentage of the selling price (profit ÷ selling price). Markup is profit as a percentage of the cost (profit ÷ cost). A 50% markup on a $100 cost item prices it at $150, which is only a 33% margin, not 50% — treating these as equivalent when setting prices systematically underprices products relative to the margin target actually intended.
Why Margin Percentage Alone Doesn't Tell the Full Story
A high margin percentage on a low-volume, high-cost item can generate less total profit than a lower margin percentage on a high-volume item. Margin percentage measures profitability per unit, not overall business profitability — a full pricing strategy needs to weigh margin percentage against expected sales volume and total fixed costs, not optimize margin percentage in isolation.
Setting Prices to Hit a Target Margin
To price a product for a specific target margin (rather than a markup), the calculation isn't simply "cost plus margin percentage" — that formula actually calculates markup, not margin, which produces a lower margin than intended. Correctly hitting a target margin requires dividing cost by (1 minus the target margin as a decimal), not multiplying cost by (1 plus the margin). This is a frequent source of pricing errors when margin and markup formulas get swapped.
What Margin Calculations Don't Include
- Fixed overhead costs — rent, salaries, and other costs not tied to a specific unit aren't part of a per-item margin calculation, so a healthy per-item margin doesn't guarantee overall business profitability once overhead is factored in.
- Payment processing and platform fees — selling through a marketplace or payment processor reduces actual take-home revenue below the listed selling price, which a basic cost-vs-price margin calculation doesn't account for.
- Returns and shrinkage — expected return rates or inventory loss reduce realized margin below the calculated margin on a per-sale basis.
