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Profit Margin Calculator

Enter what an item costs you and what you sell it for to see gross profit, margin and markup — or set a target margin and get the selling price you need. Margin and markup are shown side by side so they are never confused.

What do you want to calculate?

Number of units sold.

Results update as you type.

Results

Gross margin

40%

Gross profit per unit
$40.00
Gross marginProfit ÷ selling price
40%
MarkupProfit ÷ cost
66.67%
Profit
$40.00

The formulas

profit       = selling_price − cost_price
gross_margin = profit ÷ selling_price × 100
markup       = profit ÷ cost_price × 100

price for a target margin = cost_price ÷ (1 − margin_rate)

If the selling price is zero, margin can’t be calculated (it would mean dividing by zero), so the result shows “Not defined” instead of an error. The same applies to markup when the cost is zero.

Margin vs markup

CostPriceProfitMarginMarkup
$60$100$4040%66.67%
$50$100$5050%100%
$75$100$2525%33.33%
$120$100−$20−20%−16.67%

A common pricing mistake is to add the target percentage to cost. Adding 40% to a $60 cost gives $84, which is a 28.6% margin, not 40%. Use the “Price for target margin” mode instead.

What to include in cost

For a realistic gross margin, include every direct cost of selling one unit: purchase price, packaging, shipping to you, and payment processing fees. The Stripe and PayPal calculators can estimate the fee to add. If you’re GST-registered, use GST-exclusive figures — the GST calculator can strip GST from a price.

Gross profit is not the same as net profit: rent, wages, software, advertising and income tax all come out of gross profit before you see a net result.

Frequently asked questions

What is the difference between margin and markup?

Both compare profit to something, but to different things. Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. Buying at $60 and selling at $100 is a 40% margin but a 66.67% markup.

How do I price a product for a 40% margin?

Divide the cost by (1 − 0.40). A $60 cost needs a $100 selling price for a 40% margin. Adding 40% to the cost gives $84, which is only a 28.6% margin.

Can margin be more than 100%?

No. Gross margin can approach 100% when cost is close to zero, but cannot reach it while there is any cost. Markup has no upper limit.

Should I include GST in cost and price?

For GST-registered businesses it is usual to calculate margins on GST-exclusive amounts, because GST collected is passed on to Inland Revenue. Use the same basis for both cost and price.

Is this net profit?

No. This is gross profit on the product: price minus the direct cost you enter. Overheads, payment fees, shipping and tax are not included unless you add them to the cost.

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