Margin and Profit Calculator

Use this margin and profit calculator to work out gross profit, profit margin and markup from your selling price and cost price. Enter both figures above to get an instant result.

This calculator is useful for retailers, e-commerce businesses, service providers, wholesalers and anyone who needs to price products or services accurately.

What is profit margin?

Profit margin is the percentage of your selling price that remains as profit after costs are deducted.

It helps you understand how much money you keep from each sale before other business expenses are considered.

Margin and profit formula

This calculator uses the following formulas:

Gross Profit = Selling Price – Cost Price

Profit Margin = (Gross Profit ÷ Selling Price) × 100

Markup = (Gross Profit ÷ Cost Price) × 100

These three figures are related, but they are not the same.

How to use this margin and profit calculator

1. Enter your selling price.
2. Enter your cost price.
3. The calculator updates instantly and shows:
   • gross profit
   • profit margin
   • markup

Use the Reset button to clear the inputs and start again.

Example margin and profit calculation

If:

• selling price = £100
• cost price = £60

Then:

Gross Profit = £100 – £60 = £40

Profit Margin = (£40 ÷ £100) × 100 = 40%

Markup = (£40 ÷ £60) × 100 = 66.67%

So the sale produces:

• £40 gross profit
• 40% profit margin
• 66.67% markup

Margin vs markup

Margin and markup are often confused, but they are calculated differently.

Profit margin

Margin is based on the selling price.

Markup

Markup is based on the cost price.

This means markup is usually higher than margin for the same product.

For example:

• cost price = £50
• selling price = £75
• profit = £25

Then:

• margin = 33.33%
• markup = 50%

Why margin matters

Knowing your margin helps you:

• price products more accurately
• protect profitability
• compare product performance
• plan discounts without losing money
• understand how cost changes affect earnings

A product can have healthy revenue but still poor margin if the cost base is too high.

When to use a margin and profit calculator

This calculator is useful for:

• product pricing
• retail and e-commerce
• wholesale price setting
• service pricing
• quoting work
• analysing discounts and promotions

It is especially helpful when you need a quick check before changing prices.

How to improve profit margin

If your margin is too low, you may be able to improve it by:

• raising prices carefully
• reducing supplier costs
• increasing average order value
• offering bundles
• reducing waste
• improving operational efficiency
• focusing on higher-margin products or services

Even small pricing changes can make a noticeable difference to margin.

Frequently asked questions

How do you calculate profit margin?

Profit margin is calculated by dividing gross profit by selling price, then multiplying by 100.

What is the difference between margin and profit?

Profit is the money left after subtracting cost from selling price. Margin is that profit expressed as a percentage of selling price.

What is markup?

Markup is the percentage added to cost price to arrive at the selling price.

Why is markup higher than margin?

Markup is based on cost, while margin is based on selling price. Because of this, the percentage figures are different.

Can profit margin be negative?

Yes. If your cost price is higher than your selling price, the result is a loss, which gives a negative margin.

Is gross profit the same as net profit?

No. Gross profit only subtracts direct costs. Net profit also takes account of overheads, tax and other business expenses.

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