Calculate profit, margin percentage, and markup percentage instantly
Your cost to produce or acquire the item
Price you sell the item for
Margin = (Selling Price - Cost) / Selling Price × 100
Profit margin shows what percentage of the selling price is profit. It's typically used to measure overall profitability and compare products.
Markup = (Selling Price - Cost) / Cost × 100
Markup shows how much you're adding to the cost to get the selling price. It's often used in retail to set prices based on cost.
Margin and markup are different! A 50% markup does NOT equal a 50% margin. For example: If cost is $100 and you add 50% markup, selling price is $150. But the margin is 33.33% ($50 profit / $150 selling price). Always use the right metric for your business decisions.
Margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost. They use the same profit amount but different denominators. Margin is always lower than markup for the same transaction. For example, a 100% markup equals a 50% margin.
A "good" profit margin varies by industry. Grocery stores typically have 1-3% margins, while software companies can have 70%+ margins. Generally, a net profit margin above 10% is considered healthy for most businesses. Compare your margins to industry benchmarks to assess performance.
Increase profit margins by: reducing costs (negotiate with suppliers, improve efficiency), increasing prices (add value, improve positioning), upselling higher-margin products, reducing waste, or improving operational efficiency. Focus on both cost reduction and value creation.
Most businesses use markup for setting prices (e.g., "cost plus 50%") but use margin for analyzing profitability. Markup is simpler for pricing decisions, while margin is better for comparing profitability across products and understanding what percentage of sales becomes profit.
"Essential for my e-commerce business! Finally understand the difference between margin and markup. Helped me price products correctly."
Diana R.
Online Retailer
"Perfect for analyzing product profitability. The visual breakdown makes it easy to present to stakeholders. Use it daily."
James W.
Business Analyst
"Great teaching tool for my business students. The formulas and explanations are clear and the examples are practical."
Prof. Michael L.
Business Professor
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