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Margin Calculator

Use this free margin calculator to find the profit margin percentage from revenue and cost. Enter your selling price and cost to instantly see the margin percentage, profit amount, and how margin compares to markup.

Enter Values

Revenue (Selling Price)

The total amount you receive from the sale

Cost

The total cost to produce or acquire the item

Result

Enter values above and click Calculate to see your result.

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Formula

Margin = ((Revenue - Cost) / Revenue) x 100

Subtract cost from revenue to get profit. Divide profit by revenue (not cost) and multiply by 100 for the margin percentage. Margin always uses revenue as the base, unlike markup which uses cost.

Worked Example

Revenue: $200, Cost: $150 Step 1: Profit = $200 - $150 = $50 Step 2: Margin = ($50 / $200) x 100 = 25% Step 3: For comparison, markup = ($50 / $150) x 100 = 33.3% Result: 25% margin (33.3% markup). You keep $0.25 of every dollar in revenue.

What Is Profit Margin and Why Does It Matter?

Profit margin is the percentage of revenue that remains as profit after costs are deducted. It is one of the most important metrics for any business because it shows how efficiently the company converts sales into profit. Higher margins mean more profit per dollar of revenue.

Margin uses revenue as the denominator: Margin = Profit / Revenue
Markup uses cost as the denominator: Markup = Profit / Cost
A 50% margin means you keep half of every dollar earned. A 50% markup means you charge 1.5x your cost.
Retail margins typically range from 20-50%, while software margins can exceed 80%
Negative margin means you are selling below cost (operating at a loss)

Understanding the difference between margin and markup is critical for pricing decisions. Many businesses confuse the two, leading to underpricing or overpricing their products.

You can also calculate changes using our Profit Margin Calculator, Markup Calculator, Profit Calculator or Gross Profit Calculator.

Frequently Asked Questions

What is the difference between margin and markup?

Margin is profit divided by revenue (selling price). Markup is profit divided by cost. A 50% margin is NOT the same as 50% markup. 50% margin = 100% markup. This is one of the most common pricing mistakes in business.

What is a good profit margin?

It varies by industry. Grocery stores operate on 1-3% net margins. Restaurants target 3-9%. Retail clothing aims for 4-13%. Software companies can achieve 20-40%+ net margins.

Can margin be negative?

Yes. Negative margin means cost exceeds revenue. You are losing money on every sale. This happens during clearance sales, loss leaders, or when costs unexpectedly increase.

How do I convert margin to markup?

Markup = Margin / (1 - Margin). For example, 25% margin = 0.25 / 0.75 = 33.3% markup. Conversely, Margin = Markup / (1 + Markup).

Is this gross margin or net margin?

This calculator computes the margin between the two numbers you enter. If you enter revenue and COGS, it is gross margin. If you enter revenue and all expenses, it is net margin.

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I can help you understand the margin calculator formula, interpret your results, and answer follow-up questions.

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