ToolForage.
BUSINESS CALCULATOR

Profit Margin Calculator

Calculate margin and markup from revenue and cost, or find a selling price or maximum cost for a target margin. The result shows the actual margin after target calculations round to 0.01.

Calculator

Labels amounts only; no exchange-rate conversion.
USD
USD
Price rounds up and maximum cost rounds down to 0.01. The result shows the actual achieved margin.
YOUR RESULTS
Profit margin33.33 %
Profit or loss
50.00 USD
Markup on cost
50.00%
Cost as share of revenue
66.67 %
Revenue or selling price used
150.00 USD
Cost used
100.00 USD

Margin = (150 − 100) ÷ 150 × 100 = 33.333333%. Markup divides profit by cost instead.

Page guide

Profit margin versus markup

Margin uses revenue as the denominator. Markup uses cost. A loss produces negative profit and margin; markup is undefined when cost is zero.

To evaluate profit against a total investment cost rather than sales revenue, use the ROI Calculator and include the relevant costs in its cost basis.

The formula

Margin = (revenue − cost) ÷ revenue × 100. Target price = cost ÷ (1 − target/100). Maximum cost = revenue × (1 − target/100).

Profit is revenue minus cost; markup divides that profit by cost. Target price rounds upward to 0.01, while maximum cost rounds downward to 0.01, so the resulting margin meets or exceeds the target. Revenue must remain positive and cost nonnegative. Cost share plus margin is 100%.

Worked example

Selling for 150 with a cost of 100 creates 50 profit. Margin is 50 ÷ 150 = 33.33%, while markup is 50 ÷ 100 = 50%.

How to use this calculator

  1. Choose direct margin, Price for a target margin, or Maximum cost for a target margin.
  2. For direct margin, enter matching revenue and cost. For target price, enter cost and the desired margin. For maximum cost, enter revenue and the desired margin.
  3. Use the same currency, scope and period for amounts. Include the expenses relevant to the margin you want to measure.
  4. Read the price and cost used, actual margin, profit and markup. Valid changes update the numerical working.

Margin is not markup

A 50% markup on 100 creates a 150 selling price and 33.33% margin. Applying the wrong percentage can miss a target.

State whether cost includes only goods or also labor, overhead, fees, and returns.

Use consistent accounting periods

Comparing monthly revenue with annual cost produces a meaningless margin. Align the same product scope, currency, and time period.

Gross, operating, and net margins use different cost definitions. This calculator uses only the cost entered.

Set a price or cost limit from a margin target

A cost of 100 with a 40% target margin requires a price of 166.67 after rounding upward; profit is 66.67 and actual margin is approximately 40.0012%. A revenue of 150 with that target permits a maximum cost of 90. Price and budget modes use the same margin definition as direct entry.

A 100% target with a positive cost has no finite selling-price solution. With zero cost, the minimum supported positive selling price is 0.01 and margin is 100%. A 100% target in cost-limit mode permits zero cost. Negative targets describe an intended loss and are supported down to −1,000%.

Assumptions & limitations

What this calculation assumes

  • Revenue is positive.
  • Cost and revenue cover the same scope and period.
  • No separate tax treatment.

What to keep in mind

  • It does not define gross, operating, or net cost for you.
  • Zero cost makes markup undefined.
  • Forecasts depend on accurate volume and cost data.
  • Target calculations assume 0.01 currency increments for price and cost. Currency selection labels amounts only; taxes, fees and other costs must be included in your entered cost.

Common questions

Why are margin and markup different?

They divide the same profit by different bases.

Can margin be negative?

Yes, when cost exceeds revenue.

Can margin exceed 100%?

With nonnegative cost and positive revenue, it cannot exceed 100%.

Why does the actual margin differ slightly from my target?

The target selling price rounds up to 0.01, or the maximum cost rounds down to 0.01. This conservative rounding can make actual margin slightly higher than the target.

Sources & further reading

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