Profit Margin Calculator

🧮 Profit Margin Formula

Profit margin measures how much of the selling price remains as gross profit after subtracting the cost entered into the calculator.

If an item costs $60 and sells for $100, gross profit is $40. The profit margin is:

This calculator uses the cost and selling price you provide. It does not automatically add taxes, payment fees, shipping, labor, overhead or other expenses.

↔ Profit Margin vs Markup

Margin and markup both compare profit with another amount, but they use different denominators. That is why the percentages are usually different even when the cost, selling price and profit are identical.

Using a $60 cost and $100 selling price:

A 40% margin therefore does not mean a 40% markup. For dedicated markup calculations, use the Markup Calculator.

🎯 How to Calculate a Selling Price for a Target Margin

If you know your cost and the gross margin you want, you can rearrange the margin formula to calculate the required selling price.

Suppose your cost is $60 and you want a 40% margin:

A target margin must be below 100% when cost is greater than zero. As the target margin approaches 100%, the required selling price rises sharply.

📋 Profit Margin Examples

These examples assume the number entered as cost represents all costs you want included. If additional costs exist, include them in your cost figure before interpreting the result as the margin for that transaction.

📉 What Happens When Selling Price Is Below Cost?

If the selling price is lower than the cost, the gross profit becomes negative. In this situation the calculator reports a loss and the profit-margin percentage is negative.

For example, if something costs $120 and sells for $100:

A negative margin indicates that the entered selling price does not cover the entered cost.

🏪 What Costs Should You Include?

The answer depends on what you are trying to measure. This calculator does not decide which expenses belong in your cost—it performs the mathematics using the cost figure you enter.

For a simple product calculation, your cost might include only the purchase or production cost. For a broader profitability analysis, you may also need to consider expenses such as:

• Shipping or freight.
• Packaging.
• Marketplace or payment-processing fees.
• Direct labor.
• Returns or wastage.
• Other costs relevant to the product or transaction.

💱 Currencies, Decimals and Rounding

The formulas are currency-independent. You can use AED, USD, EUR, GBP or another currency as long as the cost and selling price use the same currency.

The calculator displays monetary amounts to two decimal places and percentage results with practical decimal precision. Calculations are performed using the numerical values entered before the displayed result is rounded.

If you are reproducing an invoice, accounting report, marketplace statement or other business record, use the rounding and cost-allocation rules required by that system.

🛠️ How to Use the Calculator

• Enter the cost of the product, service or transaction.
• Enter its selling price or revenue.
• Select Calculate, or simply edit the fields for a live result.
• Review gross profit, profit margin and markup separately.
• Use the target-margin section if you want to calculate a required selling price instead.
• Use the sample buttons to compare profitable, break-even and loss scenarios.

The calculation is designed to run with JavaScript in your browser and does not need to submit the entered numbers to a separate calculation service solely to perform the arithmetic.