How to calculate profit margin
Profit margin tells you what share of each sale is profit. Subtract the cost from the selling price to get gross profit, then divide by the selling price and multiply by 100 for the margin percentage. The calculator also shows markup — profit as a percentage of cost — which retailers often use when setting prices.
The formulas
Profit = Price − Cost · Margin = Profit ÷ Price × 100 · Markup = Profit ÷ Cost × 100
Worked example
Cost $40, selling price $100:
- Gross profit: $60
- Margin: $60 ÷ $100 = 60%
- Markup: $60 ÷ $40 = 150%
Margin vs markup
They describe the same profit from two angles. Margin is profit ÷ price; markup is profit ÷ cost. Because price is larger than cost, markup percentages are always higher than the equivalent margin. Mixing them up is a common pricing mistake.
Gross vs net margin
The figure here is gross margin — it counts only the direct cost of the product. Your net margin also subtracts overheads like rent, marketing, payment fees, and returns, so it's lower. A healthy gross margin can still leave a thin net margin once everything else is paid.
Common mistakes to avoid
Quoting markup as if it were margin. Pricing off gross margin and forgetting overheads eat into net profit. Ignoring fees and shipping when calculating the true cost.
Frequently asked questions
Cost $40, price $100 — what's the margin?
Profit is $60. Margin = 60 ÷ 100 = 60%. Markup = 60 ÷ 40 = 150%.
What's a good profit margin?
It varies by industry. Many ecommerce stores aim for gross margins of 30-60%, but it depends on your costs and market.
What's the difference between gross and net margin?
Gross counts only product cost; net also subtracts overheads, so it's lower.
Can margin be negative?
Yes — if the price is below cost, you're selling at a loss.
Is my data saved?
No. Everything runs in your browser; nothing is uploaded.