Profit Margin Calculator

Profit margin calculator

Enter a cost and a selling price to see your gross profit, gross margin, markup and the price-to-cost multiplier at a glance — or work the problem backwards. The reverse-solve modes let you set a sell price that hits a target margin, or find the maximum cost a fixed price can absorb. Margin and markup are constantly confused, and pricing on the wrong one quietly erodes profit, so this tool shows both side by side along with the exact working behind every number.

How it works

Three relationships drive everything the calculator reports:

gross profit = price − cost
margin %     = profit ÷ price × 100    (profit as a share of the selling price)
markup %     = profit ÷ cost  × 100    (profit as a share of the cost)

When you switch to a reverse mode, it rearranges those formulas. Given a cost and a target margin, the sell price is cost ÷ (1 − margin). Given a price and a target margin, the highest cost you can pay is price × (1 − margin). Because the cost base is smaller than the price, markup is always the larger of the two percentages — a 50% margin is the same deal as a 100% markup. Margin therefore can never reach 100%, while markup has no upper limit. Optionally, add your fixed costs (tooling, rent, ad spend) and the tool divides them by the per-unit profit to give a break-even unit count — how many sales clear your overheads before the venture turns a real profit.

Worked example

Cost 40, selling price 100:

• Gross profit: 100 − 40 = 60
• Margin: 60 ÷ 100 = 60%
• Markup: 60 ÷ 40 = 150%
• Price ÷ cost: 100 ÷ 40 = 2.5×

Now reverse it. You want a 40% margin on a 40 cost: price = 40 ÷ (1 − 0.40) = 40 ÷ 0.60 = 66.67. Add 6,000 of fixed costs at the first example’s 60 per-unit profit and you break even after 100 units (6,000 ÷ 60).

Every figure is calculated in your browser — nothing is uploaded or stored.