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Business Tool

Profit Margin
Calculator

Calculate gross profit margin, markup percentage, net profit, and break-even point. Find the right price for any product or service instantly.

Find Margin Cost + Revenue → Margin %
Find Price Cost + Margin % → Price
Markup ↔ Margin Convert between the two
Gross Profit Margin
0%
Enter your cost and revenue below
$0
Revenue
$0
Total Cost
$0
Gross Profit
0%
Markup %
Cost of Goods / Service
Cost Price (COGS)
$
What you pay to produce or acquire this product
Additional Costs (optional)
$
Shipping, packaging, labour overhead, etc.
Revenue / Selling Price
Selling Price
$
What you charge the customer
Units Sold (optional)
#
For total revenue and profit calculation
Revenue breakdown
Cost
Profit
Cost 60%
Gross Profit 40%
Break-even Analysis
Fixed costs to recover (monthly)
$
Break-even units per month—
Break-even revenue per month—
Profit per unit (contribution)—

Margin vs. Markup

Margin is profit as a % of selling price. Markup is profit as a % of cost. A 40% margin equals a 66.7% markup — they're not the same number. Always clarify which you mean when discussing pricing strategy.

The 40% Rule

Many profitable e-commerce and product businesses target a 40–60% gross margin. This leaves room for operating costs (marketing, staff, rent) and still delivers net profit. Service businesses often run 60–80% gross margins.

Gross vs. Net Margin

Gross margin only subtracts cost of goods sold (COGS). Net margin subtracts all expenses including operating costs, salaries, rent, and taxes. Gross margin shows product profitability; net margin shows business profitability.

Pricing for Freelancers

If your cost is your time (hourly rate × hours), set a target margin to account for unpaid hours, taxes, software, and equipment. A 35–50% margin on your time cost is a healthy starting point for freelance pricing.

Frequently Asked Questions
What is a good profit margin? ▾
It depends entirely on the industry. Retail typically targets 2–10% net margin. Software companies often achieve 20–40%. Service businesses run 15–30%. As a rough rule, a gross margin above 40% gives most businesses enough room to cover operating costs and remain profitable.
How do I calculate profit margin? ▾
Gross Profit Margin = (Revenue − COGS) ÷ Revenue × 100. For example: Revenue $100, Cost $60, Gross Profit $40, Margin = 40/100 × 100 = 40%. This calculator handles the maths instantly — just enter your cost and selling price above.
What is markup and how does it differ from margin? ▾
Markup = (Selling Price − Cost) ÷ Cost × 100. Margin = (Selling Price − Cost) ÷ Selling Price × 100. The same $40 profit on a $60 cost is a 66.7% markup but only a 40% margin. Use the "Markup ↔ Margin" tab above to convert between the two instantly.
How do I calculate the selling price from a target margin? ▾
Selling Price = Cost ÷ (1 − Margin%). If your cost is $60 and you want a 40% margin: $60 ÷ (1 − 0.40) = $60 ÷ 0.60 = $100. Use the "Find Price" tab above — enter your cost and desired margin percentage to get the required selling price instantly.
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How to Calculate Your Profit Margin

Calculate gross margin, net margin, and markup for any product or service.

01
Enter your revenue
The total amount the customer pays — your selling price. For a service, this is your invoice total.
02
Enter your costs
For gross margin: enter cost of goods sold (COGS) — direct costs of delivering the product or service. For net margin: include all costs (overheads, salaries, everything).
03
Review gross vs net margin
Gross margin shows product profitability. Net margin shows overall business profitability. A high gross margin with low net margin means high overheads.
04
Check your markup
Markup is calculated from cost; margin is calculated from revenue. They're different numbers. Retailers often set prices using markup; investors evaluate businesses using margin.
05
Use it for pricing decisions
If your target gross margin is 60%, and your cost is $40, your price must be $100 ($40 ÷ (1 − 0.60) = $100).
💡
💡 SaaS businesses typically have 70–80% gross margins. Retail is typically 20–50%. Service businesses vary widely from 20% (high overhead) to 60%+ (solo consultants). Compare to your industry benchmark.