Free calculator
Profit Margin Calculator
Enter a selling price and the costs that come with each sale to see your margin and markup — or work backward from the margin you want to the price you should charge, and check what a discount really costs you.
What margin and markup do I make on each sale?
Leave empty to work backward from a target margin
e.g. product or materials, labour on the job, payment fees
Find the price that gives this margin
See what it does to profit per sale
Nothing is saved or sent anywhere.
Result
Enter your numbers
The formulas
Profit per sale = price − costs per saleMargin = profit ÷ priceMarkup = profit ÷ costPrice for a target margin = cost ÷ (1 − margin)Margin and markup describe the same profit from two directions, which is why they are so easy to mix up. Use margin when you think in terms of revenue; use markup when you price by adding a percentage to your costs.
Worked example
You sell at $100 and the costs that come with each sale are $60. Profit per sale is $40, so your margin is 40 ÷ 100 = 40% and your markup is 40 ÷ 60 = 66.7%.
Offer a 10% discount and the price drops to $90 while costs stay at $60. Profit per sale falls from $40 to $30. To earn the same total profit you would need 40 ÷ 30 − 1 = about 33.3% more sales.
Want a 40% margin on a product that costs $60? The price is 60 ÷ (1 − 0.40) = $100.
What the result means — and what it does not
- The margin covers only the costs you entered. Rent, salaries, software and other overhead still need paying out of the total profit.
- The discount comparison assumes your costs per sale do not change. Real discounts can also bring different customers, or sales you would have made anyway.
- A healthy margin depends on your business; there is no universal target.
Common questions
What is the difference between margin and markup?
Both use the same profit, divided by different numbers. Margin divides profit by the selling price; markup divides it by the cost. Selling at $100 with $60 of costs gives a 40% margin and a 66.7% markup. Pricing with “40% on cost” therefore gives a lower margin than many owners expect.
Which costs should I include?
The costs that come with each sale: the product or materials, labour spent on that job, packaging, delivery and payment fees. Leave out costs you pay regardless of sales, such as rent or salaries; those are covered by the total profit across all your sales.
Why does a small discount need so many extra sales?
A discount comes entirely out of your profit, not your costs. Taking $10 off a $100 sale with $60 of costs cuts profit per sale from $40 to $30 — a quarter of it — so you need a third more sales just to earn the same total.
Is this my net profit margin?
No. It is the margin after the costs you entered. Net profit margin also deducts overhead, interest and taxes, which you will find on your profit and loss statement.