Free Profit Margin Calculator
Profit margin is the single most important pricing number in your business. This calculator gives you both the profit amount and the margin percentage instantly — and lets you flip the calculation to work out the selling price required to hit a target margin.
Results
What the Profit Margin Calculator does
Profit margin is the percentage of a single sale's selling price that is left over as profit after subtracting the direct cost of that item. Unlike gross margin (a whole-business COGS figure) or net margin (after every expense and tax), profit margin here is a per-item or per-deal check: cost in, price out, margin left.
Methodology and formula
Profit Margin % = (Selling Price − Cost Price) / Selling Price x 100; reverse mode solves Selling Price = Cost Price / (1 − Target Margin / 100).
Worked example
- Inputs
- Cost price 24; selling price 40.
- Result
- Profit 16; profit margin 40%.
Every $1 the customer pays leaves $0.40 in your pocket before any overhead or tax is deducted. If you instead entered a 40% target margin with the same $24 cost, the reverse calculation would tell you to charge exactly $40.
When to use this tool
Use this tool for a quick single-item or single-deal check of what a price leaves you. Use the Markup Calculator when you're starting from cost and want to build up to a price, and the Product Pricing Calculator when you need to assemble a price from materials, labour and overhead first.
About the Profit Margin Calculator
The profit margin formula
Profit margin = (Selling Price − Cost Price) / Selling Price × 100. It answers the question: for every dollar the customer pays, how many cents do you keep? A 40% margin means you keep $0.40 of every $1.00 in revenue.
Profit margin vs markup vs gross margin vs net margin
These four terms get used interchangeably and shouldn't be. Profit margin (this tool) checks one price against one cost. Markup expresses the same profit as a percentage of cost instead of price, so the numbers never match. Gross margin applies the same maths across your whole revenue and cost of goods sold for a period. Net profit margin goes further and subtracts operating expenses, interest and tax too, leaving what actually hits the bank.
Why margin (not markup) is what investors look at
Margin is expressed as a percentage of revenue, which is how P&L statements are written. Markup is expressed as a percentage of cost. Two very different numbers — a 100% markup is only a 50% margin. When a buyer, lender or investor asks for your margin, they mean margin.
Healthy margin ranges by industry
Software and SaaS: 70–85%. Professional services: 40–60%. Retail: 20–50%. Restaurants: 5–15%. Compare your number to your industry benchmark, not to an arbitrary target.
Frequently asked questions
What's a good profit margin?
What's the difference between margin and markup?
Can I calculate the selling price for a target margin?
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Related Pricing Tools
Other free tools in the pricing & profitability silo.
Markup Calculator
Enter cost and desired markup % to see selling price and profit — with a side-by-side margin vs markup comparison.
Open toolGross Margin Calculator
Enter revenue and COGS to compute gross profit and gross margin percentage.
Open toolProduct Pricing Calculator
Build a selling price from materials, labour, overhead and target margin — with a cost breakdown chart.
Open tool