Profit margin calculator
Find your margin and markup from cost and price, set the price for a target margin, see what fees and discounts really leave you, and check gross, operating and net margin. Free, no sign-up, nothing leaves your browser.
Made by Anatolii Ulitovskyi 
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The formula
How to calculate profit margin
Margin is the share of the selling price you keep after paying for what you sold.
Work it backwards to set a price. Divide the cost by one minus the margin you want. To find the most you can pay for a product, multiply the price by one minus the margin.
Cost $60, price $100
(100 − 60) ÷ 100 = 40%
You keep $40 of every $100 sale.
Cost $60, target 40%
60 ÷ (1 − 0.40) = $100
Any lower price misses the target.
Price $100, target 40%
100 × (1 − 0.40) = $60
The most you can pay a supplier and still hit 40%.
The most common pricing mistake
Margin vs markup
Both use the same profit. Margin divides it by the price, markup divides it by the cost. Adding a 40% markup gives only a 28.6% margin.
| Markup on cost | Margin on price | Example: cost $100 |
|---|---|---|
| 25% | 20% | Price $125, profit $25 |
| 33.3% | 25% | Price $133.33, profit $33.33 |
| 50% | 33.3% | Price $150, profit $50 |
| 66.7% | 40% | Price $166.67, profit $66.67 |
| 100% | 50% | Price $200, profit $100 |
| 150% | 60% | Price $250, profit $150 |
| 200% | 66.7% | Price $300, profit $200 |
| 300% | 75% | Price $400, profit $300 |
Markup can go above 100%. Margin cannot reach 100% unless the cost is zero.
Three margins
Gross, operating and net margin
Each one subtracts more costs. Together they show where the money goes.
Revenue − cost of goods sold
Shows whether the product itself is priced well. Use it to compare products and suppliers.
($500k − $300k) ÷ $500k = 40%
Gross profit − operating expenses
Adds salaries, rent, marketing and software. Shows whether the business runs at a profit.
($200k − $120k) ÷ $500k = 16%
Operating profit − interest, taxes, other
The bottom line: what is left of each sale after every cost.
($80k − $30k) ÷ $500k = 10%
Before you run a sale
How much more you must sell after a discount
A discount comes straight out of your margin. To keep the same total profit, you need this many more sales.
| Your margin | 5% discount | 10% discount | 20% discount |
|---|---|---|---|
| 20% | +33% | +100% | No profit left |
| 30% | +20% | +50% | +200% |
| 40% | +14% | +33% | +100% |
| 50% | +11% | +25% | +67% |
The Margin tab shows this for your own numbers.
Spreadsheets
Profit margin formulas for Excel and Google Sheets
Put the cost in A1 and the selling price in B1. Format results as percentages.
Profit margin
Markup
Price for a 40% margin
Markup to margin (markup in C1)
Benchmarks
Profit margins by industry
Average margins of US public companies, January 2026. Small businesses differ, but the ranking between industries holds.
| Industry | Gross margin | Operating margin | Net margin |
|---|---|---|---|
| Software | 71.7% | 33.0% | 25.5% |
| Hotels and gaming | 60.9% | 19.4% | 10.4% |
| Apparel | 56.9% | 9.1% | 3.9% |
| Healthcare products | 54.0% | 15.3% | 9.6% |
| Business and consumer services | 33.4% | 12.3% | 7.0% |
| Retail (general) | 33.2% | 6.8% | 5.6% |
| Restaurants | 32.2% | 15.8% | 9.4% |
| Building materials | 30.9% | 12.6% | 7.4% |
| Grocery retail | 26.3% | 2.3% | 1.3% |
| Computer services | 24.3% | 7.4% | 4.5% |
| Trucking | 21.2% | 6.9% | 3.8% |
| All US companies | 37.8% | 12.8% | 9.7% |
Source: Aswath Damodaran, NYU Stern, margins by sector (US), data as of January 2026. Operating margin is the pre-tax unadjusted figure.
FAQ
Profit margin questions
How do you calculate profit margin?
Subtract the cost from the selling price, divide by the selling price and multiply by 100. A product that costs $60 and sells for $100 has a 40% margin.
What is the difference between margin and markup?
Margin divides profit by the selling price. Markup divides the same profit by the cost. A $60 cost sold at $100 is a 40% margin but a 66.7% markup, so confusing the two leads to underpricing.
How do I set a price for a target margin?
Divide the cost by one minus the target margin. For a 40% margin on a $60 cost: 60 ÷ 0.60 = $100. If you also pay fees, shipping or advertising per order, use the Pricing with fees tab.
What is a good profit margin?
It depends on the industry. Across US public companies the average gross margin is about 38% and the average net margin about 10% (January 2026). Software runs far higher; grocery retail runs far lower. Compare with businesses like yours.
What is the difference between gross and net margin?
Gross margin subtracts only the cost of goods sold. Net margin subtracts every cost, including salaries, rent, marketing, interest and taxes. Gross margin judges the product; net margin judges the whole business.
Can profit margin be more than 100%?
No. Margin is a share of the price, so it can only reach 100% if the cost is zero. Markup can be any size: selling at three times cost is a 200% markup and a 66.7% margin.
What is profit percentage?
People often mean markup: profit divided by cost. Some mean margin: profit divided by price. Check which one is meant before you compare numbers.
How do discounts affect my margin?
A discount reduces the price but not the cost, so the whole discount comes out of profit. With a 40% margin, a 10% discount leaves a 33.3% margin, and you need 33% more sales to earn the same profit.
Should fees and shipping be included in margin?
For gross margin, include the costs of making and delivering each sale, such as the product, shipping and payment fees. Costs that do not change with each sale, like rent, belong in operating margin.
References
Sources
- Margins by industry: Aswath Damodaran, NYU Stern
- Gross profit margin definition: Investopedia
- Margin vs markup: Corporate Finance Institute
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