Profit Margin Calculator
Instantly determine your gross profit, profit margin percentage, and markup. An essential pricing tool for small businesses, retailers, and freelancers.
Calculate Your Profitability
Enter your cost price and selling price below to instantly see your gross profit, profit margin, and markup percentage.
Your Profit Breakdown
Based on your entered figures
How to Calculate Profit Margin
Understanding the math behind your pricing helps you set profitable rates and avoid common business pitfalls.
Calculate Gross Profit
Subtract your total Cost of Goods Sold (COGS) from your Selling Price. For example, £80 (Selling) – £50 (Cost) = £30 Gross Profit.
Calculate Profit Margin
Divide the Gross Profit by the Selling Price, then multiply by 100. (£30 ÷ £80) × 100 = 37.5% Profit Margin.
Calculate Markup (Optional)
Divide the Gross Profit by the Cost Price, then multiply by 100. (£30 ÷ £50) × 100 = 60% Markup. This shows how much you increased the original cost.
Reverse Engineer for Target Margin
If you want a specific margin, use: Selling Price = Cost ÷ (1 – (Target Margin ÷ 100)). To get a 40% margin on a £50 item: £50 ÷ 0.60 = £83.33.
Common Pricing Scenarios
See how different cost and selling prices affect your final margin and markup percentages.
| Cost Price | Selling Price | Gross Profit | Profit Margin | Markup |
|---|---|---|---|---|
| £50.00 | £60.00 | £10.00 | 16.67% | 20.00% |
| £50.00 | £75.00 | £25.00 | 33.33% | 50.00% |
| £50.00 | £100.00 | £50.00 | 50.00% | 100.00% |
| £100.00 | £125.00 | £25.00 | 20.00% | 25.00% |
| £100.00 | £150.00 | £50.00 | 33.33% | 50.00% |
| £200.00 | £250.00 | £50.00 | 20.00% | 25.00% |
| £500.00 | £750.00 | £250.00 | 33.33% | 50.00% |
Profit Margin FAQ
Answers to the most frequently asked questions about business pricing, margins, and markup.
Profit margin is the percentage of the selling price that is profit (Profit ÷ Selling Price). Markup is the percentage added to the cost price to arrive at the selling price (Profit ÷ Cost Price). A 50% markup does not equal a 50% profit margin.
While it varies heavily by industry, a net profit margin of 10% is generally considered average, 20% is considered good or high, and 5% or lower is typically considered low. Retail and manufacturing often have lower margins than software or consulting.
To find the selling price for a target margin, use the formula: Selling Price = Cost Price ÷ (1 – (Desired Margin Percentage ÷ 100)). For example, to get a 30% margin on a £70 item, the selling price should be £70 ÷ 0.70 = £100.
No. Gross profit margin only accounts for the Cost of Goods Sold (COGS), such as materials and direct labour. It does not include operating expenses, taxes, or interest. To account for those, you would calculate the net profit margin.