Profit Margin Calculator
Margin, markup, pricing and break-even in one place
Profit Margin Calculator: Find Your Margin, Markup and Break-Even Point
Our free profit margin calculator shows how much of every sale you keep as profit. Enter your revenue, cost of goods sold and expenses to get gross profit, net profit, gross margin, net margin and markup. Two more tabs help you set a selling price for a margin or markup you want, and find how many units you must sell to cover your fixed costs.
Quick answer: with $50,000 in sales and $30,000 in cost of goods sold, your gross profit is $20,000 and your gross margin is 40.0%. After $10,000 of operating expenses, net profit is $10,000, a net margin of 20.0%. The same sale has a markup of 66.7%.
What Is Profit Margin?
Profit margin is the share of your revenue that remains as profit, shown as a percentage. A 20% margin means you keep 20 cents of every dollar you sell. It lets you compare products, months and businesses of different sizes, because it removes the effect of scale. Business owners use it to check pricing, control costs and judge whether growth is making money.
There are three common versions of margin, each counting more costs than the one before it.
| Type | Formula | Example ($50,000 revenue) |
|---|---|---|
| Gross profit margin | (Revenue − COGS) ÷ Revenue | 40.0% |
| Operating profit margin | (Gross profit − Operating expenses) ÷ Revenue | 20.0% |
| Net profit margin | Net profit ÷ Revenue | 20.0% |
Margin vs Markup
Margin and markup describe the same profit from different directions. Margin divides profit by the selling price, while markup divides profit by the cost. Because the cost is always smaller than the price, markup is always the bigger number. If you add 50% to your cost, you have a 50% markup but only a 33.3% margin. The table shows the price you need on a $40 item for each margin.
| Profit margin | Markup | Selling price on a $40 cost | Profit per item |
|---|---|---|---|
| 10% | 11.1% | $44.44 | $4.44 |
| 20% | 25.0% | $50.00 | $10.00 |
| 25% | 33.3% | $53.33 | $13.33 |
| 30% | 42.9% | $57.14 | $17.14 |
| 40% | 66.7% | $66.67 | $26.67 |
| 50% | 100.0% | $80.00 | $40.00 |
Setting a Price for the Margin You Want
To reach a target margin, divide your cost by one minus the margin. A $40 item at a 40% margin sells for $66.67, which gives $26.67 of profit per item. Using the markup method on the same item, adding 40% to the cost would give only $56.00 and a margin of 28.6%. The Selling Price tab handles both methods and shows the totals for any number of items.
Break-Even Point
Your break-even point is the number of units at which sales cover all of your costs. Each unit contributes its price minus its variable cost toward your fixed costs. With $5,000 of fixed costs, a $25 price and $10 of variable cost, each unit contributes $15, so you need 334 units, about $8,350 in sales. Add a profit target to see how many units reach it. For borrowing to fund growth, try the loan calculator, and to check percentage changes in prices or costs, use the percentage calculator.
Using Your Margin to Make Decisions
A falling margin can mean rising costs, discounting or a shift to lower-priced products. A rising margin can mean better pricing, cheaper supply or a change in what you sell. Check gross margin first, because it shows whether the product itself is profitable, then check net margin to see whether running costs are eating the profit. Remember that profit is also subject to tax, which the tax calculator can estimate for an individual.
Who Uses a Profit Margin Calculator?
Small business owners, online sellers, freelancers pricing their services, retailers, restaurant owners, accountants and students learning business finance. Results are estimates based on the numbers you enter and are not financial advice.
How to Use This Profit Margin Calculator
Choose a tab
Use Profit Margin to analyze results, Selling Price to set a price, or Break-Even to find units needed.
Enter your revenue and costs
Add sales, cost of goods sold, and any operating or other expenses.
Or set a target
On the Selling Price tab, enter a cost and a target margin or markup.
Add fixed costs for break-even
On the Break-Even tab, enter fixed costs, price and variable cost per unit.
Click the button
See profit, margins, markup, a chart and a plain-language summary.