Margin uses revenue
Profit margin = profit ÷ revenue.
PROFIT TOOL
Profit Margin Calculator
Calculate profit margin from revenue and cost, then see the price required to hit a target margin.
Calculator
Enter your numbers below. Results update automatically.
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Use consistent cost definitions when comparing margins across products.
Results
Use these numbers as a starting point for your pricing decision.
Profit margin
0.0%
Profit divided by revenue.
Profit$0.00
Markup0.0%
Required price at target margin$0.00
Total profit × units$0.00
REAL-WORLD EXAMPLE
Example: turning revenue and costs into a margin
If revenue is $5,000 and total costs are $3,250, profit is $1,750 and profit margin is 35%. Markup on cost is about 53.8%. These are different percentages because margin uses revenue as the denominator while markup uses cost.
Practical tip: Use your own costs and fee assumptions before making a pricing decision.
HOW IT WORKS
Measure profitability with margin and markup
Margin answers “how much of the selling price is profit?” Markup answers “how much did I add to cost?” Both are useful, but they are not interchangeable.
Markup uses cost
Markup = profit ÷ cost.
Target margin works backward
The target-margin price is cost divided by one minus the target margin.
FORMULA
Understand the calculation
Knowing the formula makes it easier to adjust the tool to your own business model.
Profit margin = (revenue − cost) ÷ revenue
Markup = (revenue − cost) ÷ cost
Price at target margin = cost ÷ (1 − target margin)
FAQ
Common pricing questions
What is a 50% profit margin?
A 50% margin means half of the final selling price is profit before any costs not included in the calculation.
Is 50% markup the same as 50% margin?
No. A 50% markup produces a lower margin. For example, $100 cost with a 50% markup gives a $150 selling price and a 33.3% margin.
Can margin be negative?
Yes. A negative margin means costs are greater than revenue.
Why does the target price rise quickly at high margins?
Because the denominator gets smaller as the target margin approaches 100%.
RELATED TOOLS
Keep working the numbers
Use these related calculators to check the next part of your pricing decision.
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Use the free calculator for a quick estimate, then move your products into the full Pro Excel workflow.