Use our free Profit Margin Calculator to calculate profit margin, profit, selling price, cost price, and markup. You can also calculate the selling price required to reach a target profit margin.
Profit Margin Calculator
Calculate profit margin, required selling price, or maximum cost.
How to Use the Profit Margin Calculator
Choose what you want to calculate from the calculator menu.
To calculate profit margin, enter the cost price and selling price.
To calculate the selling price required for a target margin, enter your cost price and desired profit margin.
To calculate the maximum cost for a target margin, enter the selling price and desired margin.
The calculator also displays related values such as profit and markup when applicable.
You can select a currency for displaying monetary values. The currency selector changes the displayed currency symbol but does not perform currency conversion.
What Is Profit Margin?
Profit margin measures how much of the selling price remains as profit after subtracting the cost.
It is normally expressed as a percentage of the selling price.
For example, suppose a product costs $60 and sells for $100.
Profit:
$100 − $60 = $40
Profit margin:
$40 ÷ $100 × 100 = 40%
The profit is $40, and the profit margin is 40%.
Profit Margin Calculator Formula
The basic profit formula is:
Profit = Selling Price − Cost Price
The profit margin formula is:
Profit Margin % = Profit ÷ Selling Price × 100
Or:
Profit Margin % = (Selling Price − Cost Price) ÷ Selling Price × 100
For example:
Cost Price: $80
Selling Price: $100
Profit:
$100 − $80 = $20
Profit Margin:
$20 ÷ $100 × 100 = 20%
How to Calculate Selling Price From a Target Profit Margin
If you know your cost and desired profit margin, you can calculate the required selling price.
The formula is:
Selling Price = Cost Price ÷ (1 − Profit Margin ÷ 100)
For example:
Cost Price: $70
Target Profit Margin: 30%
Calculation:
$70 ÷ (1 − 0.30) = $100
The required selling price is $100.
The resulting profit is:
$100 − $70 = $30
This produces a 30% profit margin.
How to Calculate Cost From a Target Profit Margin
You can also determine the maximum cost that allows you to maintain a desired margin at a given selling price.
The formula is:
Cost Price = Selling Price × (1 − Profit Margin ÷ 100)
For example:
Selling Price: $200
Target Profit Margin: 25%
Calculation:
$200 × (1 − 0.25) = $150
The maximum cost is $150, leaving a profit of $50.
Profit Margin vs. Markup
Profit margin and markup both describe profitability, but they use different bases.
Profit margin is calculated from the selling price.
Markup is calculated from the cost price.
Suppose a product costs $50 and sells for $75.
Profit:
$75 − $50 = $25
Profit margin:
$25 ÷ $75 × 100 = 33.33%
Markup:
$25 ÷ $50 × 100 = 50%
Therefore, a 50% markup is not the same as a 50% profit margin.
If you primarily need to calculate prices from markup percentages, use our Markup Calculator.
For additional information about calculating margins and understanding the relationship between margin and markup, see Shopify’s guide to profit margins.
Calculation Examples
What Is the Profit Margin From $60 to $100?
Cost: $60
Selling Price: $100
Profit:
$100 − $60 = $40
Profit margin:
$40 ÷ $100 × 100 = 40%
The profit margin is 40%.
What Selling Price Gives a 20% Margin on an $80 Cost?
Use:
$80 ÷ (1 − 0.20) = $100
The required selling price is $100.
Profit is $20, producing a 20% profit margin.
What Selling Price Gives a 50% Margin on a $50 Cost?
Use:
$50 ÷ (1 − 0.50) = $100
The required selling price is $100.
Notice that this represents a 100% markup on the original $50 cost.
Can Profit Margin Be Negative?
Yes. A negative profit margin occurs when the selling price is lower than the cost.
For example:
Cost: $120
Selling Price: $100
Profit:
$100 − $120 = −$20
Profit margin:
−$20 ÷ $100 × 100 = −20%
A negative margin represents a loss.
Frequently Asked Questions
What Is a Profit Margin Calculator?
A profit margin calculator determines how much profit remains from a selling price after accounting for cost. It can also help calculate selling prices or costs based on a target margin.
How Do You Calculate Profit Margin?
Subtract cost from selling price to find profit. Then divide the profit by the selling price and multiply by 100.
What Is a 20% Profit Margin?
A 20% profit margin means that 20% of the selling price represents profit. For example, a $100 selling price with an $80 cost produces $20 profit and a 20% margin.
Is Profit Margin the Same as Markup?
No. Profit margin divides profit by selling price, while markup divides profit by cost. Because they use different bases, the percentages are usually different.
Can Profit Margin Be More Than 100%?
Under the standard formula used here, profit margin cannot exceed 100% when cost is non-negative. A zero cost and positive selling price produces a 100% margin.
Why Can’t the Target Profit Margin Be 100%?
With a positive cost, achieving a 100% margin would require a selling price that approaches infinity. For this reason, the calculator accepts target margins from 0% up to, but not including, 100%.
Does the Currency Change the Formula?
No. The calculation works the same way for any currency. Selecting a currency only changes how monetary values are displayed.
Related Calculators
Markup Calculator — Calculate selling price, markup percentage, profit, and equivalent profit margin.
Percentage Calculator — Calculate percentages, percentage changes, increases, decreases, and percentage differences.
Discount Calculator — Calculate sale prices, savings, discount percentages, and original prices.
Tip Calculator — Calculate tips, total bills, and amounts per person.
Need to calculate a sales commission? Try our Commission Calculator.
Want to know how many units you need to sell to cover your costs? Try our Break-Even Calculator.