This profit margin calculator calculates monetary profit, profit margin, and markup from cost and selling price. Presenting margin and markup together helps prevent two commonly confused pricing measures from being used interchangeably.
How to use this calculator
Enter the cost to acquire or produce the item and its selling price. Profit is selling price minus cost. Margin divides profit by selling price, while markup divides profit by cost.
Formula & calculation method
Margin = (price − cost) / price × 100; Markup = (price − cost) / cost × 100Margin expresses the share of revenue retained as gross profit. Markup expresses the increase relative to cost. When price is zero, margin cannot be calculated because division by zero is undefined; the tool reports this instead of showing an invalid number.
Worked example
An item costing 60 and selling for 100 earns 40. Its margin is 40% because 40 is 40% of revenue, while its markup is 66.67% because 40 is two-thirds of cost.
Why this is useful
The calculator supports pricing review and quick comparisons across products. Separate outputs make it easier to communicate with teams that may use revenue-based margin or cost-based markup.
Limitations to keep in mind
The result is a gross calculation based only on entered cost and price. Overhead, taxes, payment fees, discounts, returns, and operating expenses must be included in cost or analyzed separately to assess net profitability.
Frequently asked questions
Why are margin and markup different?
They use different denominators: margin uses selling price, while markup uses cost. The same profit therefore produces different percentages.
Can profit margin be negative?
Yes. Selling below cost produces negative profit and a negative margin when price is positive.
Is this net profit margin?
No. It is a product-level gross margin unless your entered cost already includes every expense you want to deduct.