Profit Margin Calculator
Turn a cost and a selling price into profit, profit margin and markup — all three at once.
What this calculates
Profit is the money left after you pay for the thing you sold: selling price minus cost. The profit margin turns that into a percentage of the selling price, which is how businesses compare products and how accounts are read. Markup turns the same profit into a percentage of the cost, which is how prices are usually set in the first place. Both are correct; they answer different questions, and mixing them up is the most common pricing mistake there is.
Formula
profit = selling price − cost margin = profit ÷ selling price × 100 markup = profit ÷ cost × 100
Example
An item costs 100 and sells for 125. The profit is 25. As a share of the 125 the customer paid, that is a 20% margin. As a share of the 100 it cost you, the same 25 is a 25% markup.
Frequently asked questions
Margin vs markup — what is the difference?
They measure the same profit against different things. On an item that costs 100 and sells for 125, the profit is 25. Margin divides that 25 by the 125 selling price, giving 20%. Markup divides the same 25 by the 100 cost, giving 25%. Markup is always the larger number, so quoting a markup as if it were a margin flatters the figures — and pricing to hit a 30% margin needs roughly a 43% markup, not 30%.
Can the margin be more than 100%?
No. Margin is profit as a share of the selling price, and the profit can never be more than the whole price, so it stops at 100% (which would mean the item cost you nothing). Markup has no such ceiling — a 10 cost sold for 50 is a 400% markup.
What does a negative margin mean?
You sold below cost. An item that cost 80 and sold for 60 loses 20, which is a margin of −33.33% and a markup of −25%. That is a real answer, not an error — it is what a clearance sale or a loss leader looks like on paper.
Should I use the price before or after VAT?
Use the price without VAT. VAT is collected on behalf of the tax office and passed on, so it was never your money and including it would overstate every figure here. If you only have the VAT-inclusive price, strip the VAT out first with the VAT calculator.