Calculate margin and markup from cost and revenue, or find revenue from cost and margin
Our Profit Margin Calculator helps business owners, retailers, and entrepreneurs determine gross margin, markup, and profit from cost and revenue figures. You can also work backward to find the required revenue to hit a specific margin target.
Profit margin is one of the most important metrics for any business. It tells you how much of every dollar in revenue you actually keep after covering the cost of goods sold. A healthy margin provides room for operating expenses, marketing, and growth while ensuring long-term sustainability.
Whether you're pricing a new product, evaluating a supplier change, or preparing financial statements, understanding the relationship between cost, price, and margin is essential. This calculator also converts between margin and markup so you can communicate pricing in terms your team understands.
Gross margin is calculated by subtracting cost from revenue and dividing by revenue. For the reverse calculation, revenue is derived by dividing cost by (1 minus the desired margin percentage).
Margin is the percentage of revenue that is profit, while markup is the percentage increase from cost to selling price. For example, a 40% margin is not the same as a 40% markup — the markup percentage will always be higher than the margin percentage for the same transaction.
Healthy profit margins vary widely by industry. Retail businesses often see net margins of 2–5%, while software companies can achieve 70–80% gross margins. A margin above 20% is generally considered strong for most product-based businesses.
To find the selling price needed for a specific margin, divide your cost by (1 minus the desired margin percentage). For example, if your cost is $80 and you want a 40% margin, the selling price would be $80 ÷ (1 - 0.40) = $133.33.
No, margin percentage cannot exceed 100% because it is calculated as profit divided by revenue. If your cost is $0, the margin would be 100%. In contrast, markup percentage can exceed 100% since it is based on cost rather than revenue.
Gross margin only considers the direct cost of goods sold, while net margin accounts for all operating expenses, taxes, and interest. Gross margin measures production efficiency, whereas net margin reflects overall business profitability.