Updated: September 30, 2026

Profit Margin Calculator

Calculate gross profit, profit margin, and markup from your product or service cost and selling price.

Gross Profit $0.00
Profit Margin 0.00%
Markup 0.00%
This calculator provides an informational estimate. It does not account for taxes, overhead, payment-processing fees, shipping, labor, returns, or other business costs unless those amounts are included in the cost you enter.

Profit Margin Formula

Profit = Selling Price − Cost

Profit Margin = Profit ÷ Selling Price × 100

Markup = Profit ÷ Cost × 100

Example

Suppose:

  • Product cost = $60
  • Selling price = $100

Profit:

$100 − $60 = $40

Profit margin:

$40 ÷ $100 × 100 = 40%

Markup:

$40 ÷ $60 × 100 = 66.67%

Profit Margin vs Markup

Profit margin measures profit as a percentage of the selling price.

Markup measures profit relative to the underlying cost.

They are not interchangeable.

Why Margin Matters

Gross margin can help businesses evaluate:

  • Product pricing
  • Supplier costs
  • Discounts
  • Product profitability
  • Changes in cost

However, gross profit is not the same as net profit because operating expenses and other costs still need to be deducted.

Related Resources

Frequently Asked Questions

What is a 40% profit margin?

A 40% gross margin means that 40% of the selling price remains after subtracting the cost amount used in the calculation.

Is margin the same as markup?

No. Margin divides profit by selling price, while markup divides profit by cost.

Does this calculator show net profit?

No. It calculates profit based on the cost and selling price entered. Net profit normally considers additional operating and business expenses.