Profit Margin Calculator
Analyze your business health. Calculate your gross profit, markup, and profit margin to ensure your pricing strategy is sustainable.
Gross Profit: 0
Markup Percentage: 0%
Profit Margin: 0%
How to Use the Profit Calculator
To evaluate your pricing, enter the Cost Price (what you paid or spent to create the item) and the Selling Price (what you charge the customer). The tool will calculate the Gross Profit in cash, the Markup (profit as a % of cost), and the Profit Margin (profit as a % of revenue). High-growth businesses typically focus on maintaining a healthy margin to cover operational expenses.
Frequently Asked Questions
Margin vs. Markup: What’s the difference? +
Markup is the percentage of profit added to the cost price. Margin is the percentage of profit in the selling price. For example, if cost is $80 and sell is $100, the markup is 25% ($20 is 25% of $80), but the margin is 20% ($20 is 20% of $100).
Why is Profit Margin important? +
Profit margin shows how much of every dollar of sales a company actually keeps in earnings. It is a critical indicator of a company’s pricing power and its ability to control costs compared to competitors.
What is a "Good" Profit Margin? +
This varies by industry. Retail may operate on lower margins (5-10%) due to high volume, while software and consulting services often have much higher margins (50-80%) because their production costs per unit are very low.
How can I increase my margin? +
You can increase your margin by either raising your selling price or lowering your cost price (by negotiating better deals with suppliers or improving manufacturing efficiency).
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