What is Profit Margin?
Profit margin is the percentage of profit earned relative to the cost price or selling price. It shows how much profit a business makes on a product after accounting for costs.
Profit Margin Calculator
Calculate profit, profit margin %, or selling price easily.
Enter to calculate profit or selling price
Enter with cost price to find profit or margin %
💡 How to use this Profit Margin Calculator:
- Calculate Profit: Enter Cost Price and Selling Price, then click "Calculate Profit"
- Calculate Margin %: Enter Cost Price and Selling Price, then click "Calculate Profit Margin %"
- Calculate Selling Price: Enter Cost Price and Profit Margin %, then click "Calculate Selling Price"
- Tip: Fill any two fields to find the missing value
Example: $100 cost with 25% margin = $133.33 selling price and $33.33 profit
Understanding Profit Margin
Basic Formulas
Profit:
Profit = Selling Price − Cost Price
Example: 150 − 100 = $50
Profit Margin %:
Profit Margin % = (Profit ÷ Selling Price) × 100
Example: 50 ÷ 150 × 100 = 33.33%
Selling Price from Margin %:
Selling Price = Cost Price ÷ (1 − Profit Margin % ÷ 100)
Example: 100 ÷ (1 − 0.2) = 125
Real-World Applications
- Retail pricing and markups
- Business financial planning
- Investment analysis
- Sales and product strategy
Quick Reference Examples
| Cost Price | Selling Price | Profit | Profit Margin % |
|---|---|---|---|
| $100 | $150 | $50 | 33.33% |
| $200 | $250 | $50 | 20% |
| $50 | $70 | $20 | 28.57% |
Frequently Asked Questions
What's a good profit margin percentage?
Good profit margins vary by industry. Retail: 2-5%, Restaurants: 3-5%, Software: 20-25%, Consulting: 15-20%. Always aim for margins higher than industry averages.
What's the difference between profit margin and markup?
Markup is based on cost price (Cost × Markup %), while profit margin is based on selling price (Profit ÷ Selling Price). A 50% markup equals 33.33% profit margin.
How do I calculate selling price from cost and desired margin?
Selling Price = Cost Price ÷ (1 - Profit Margin %/100). Example: $100 cost with 25% margin: $100 ÷ 0.75 = $133.33 selling price.
Can profit margin be over 100%?
No, profit margin cannot exceed 100% because profit cannot exceed selling price. However, markup can be over 100%.