📈 Pricing
Profit Margin
Calculator
Know your margins before you set a price. Understand the difference between markup and margin and price products to actually be profitable.
Net Profit Per Unit
$0
Net margin: 0%
Gross Profit
$0
Price minus COGS
Gross Margin %
0%
Industry benchmark varies
Markup %
0%
Profit ÷ cost (not price)
Net Margin %
0%
After all costs and tax
Pricing Scenarios — Same Cost, Different Prices
Price to achieve 20% net margin—
Price to achieve 30% net margin—
Price to achieve 40% net margin—
Your current price—
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Frequently Asked Questions
What's the difference between markup and margin? ▾
Markup is profit divided by cost. Margin is profit divided by price. A 50% markup means you added 50% to cost — a $60 product costs $40 (40% gross margin). A 50% margin means 50% of the selling price is profit. Many business owners confuse these and underprice products significantly. To get a 50% margin, you need a 100% markup. Always use margin when discussing profitability; use markup when setting prices from cost.
What profit margin should my business target? ▾
Targets vary by industry but as a general guide: gross margin should be 40-60%+ for service businesses, 20-50% for product businesses. Net profit margin: 10-20% is healthy for most businesses; 5-10% is average; under 5% is tight. Retail averages 2-5% net margin. Software/SaaS can reach 20-30%+ net. Restaurants average 3-9% net despite high gross margins due to labor and overhead. Compare to your specific industry benchmarks.
How do I increase my profit margins? ▾
Raise prices (even 5-10% can dramatically improve margins if demand is inelastic), reduce COGS (better supplier deals, less waste, more efficient production), cut overhead (unnecessary subscriptions, office space, staff), improve sales mix toward higher-margin products/services, and offer add-ons or premium tiers. The easiest lever most businesses underuse is pricing — most small businesses underprice relative to the value they deliver.