Reckonary / Finance / Profit margin

Profit margin calculator

Profit marginshare of price

Profit margin

40%
Profit$40.00
Markup66.7%

Profit margin tells you how much of each sale you actually keep. It's the profit on an item shown as a percentage of the price you charge. Enter what an item costs you and what you sell it for, and this calculator gives you the margin, the dollar profit, and the markup at the same time.

How this calculator works

First it finds the profit: selling price minus cost. Margin divides that profit by the selling price, so it answers "what share of the price is profit?" Markup divides the same profit by the cost, so it answers "how far above cost did I set the price?" Because the two use different denominators, the markup number is always larger than the margin for the same item.

Margin vs markup, with numbers

Say an item costs you $60 and you sell it for $100. The profit is $40. As a share of the $100 price that's a 40% margin. As a share of the $60 cost that's about a 66.7% markup. Same dollars, two different percentages — mixing them up is one of the most common pricing mistakes, which is why both are shown here side by side.

Good to know

  • Margin can never exceed 100%, because profit can't be more than the whole price.
  • If you sell below cost, the margin and profit turn negative — that's a loss on every sale.
  • This uses one item's cost and price. It doesn't include overhead, shipping, or taxes unless you fold those into the cost figure.

Frequently asked questions

What's the difference between margin and markup?

Margin is profit as a share of the selling price; markup is the same profit as a share of the cost. A $60 item sold for $100 has a 40% margin but a roughly 66.7% markup, because the profit is compared against different starting numbers.

How do I calculate profit margin?

Subtract cost from selling price to get profit, then divide profit by the selling price and multiply by 100. For a $60 cost and a $100 price, that's (100 - 60) / 100 = 40%.

What does a negative margin mean?

It means you're selling below cost, so each sale loses money. The calculator shows the margin and profit as negative numbers so the loss is clear rather than hidden.

Is a higher margin always better?

A higher margin means more profit per sale, but pricing too high can cut your sales volume. The right margin depends on your costs, your market, and how much you sell, so compare a few price points.

Last reviewed June 2026. Margin is profit as a share of price; markup is profit as a share of cost.