Profit Margin Calculator
Calculate your gross profit margin and markup percentage from cost and selling price. Understand your business profitability and make better pricing decisions.
How It Works
Get started in seconds — no sign-up required
1
Enter Cost Price
Input what you pay to produce or purchase the product.
2
Enter Selling Price
Input the price at which you sell to customers.
3
See Your Margin
Instantly get profit amount, margin %, markup %, and profitability rating.
✨ Why Use This Tool?
- ✓Calculate both profit margin AND markup — understand the difference
- ✓Color-coded results: green for healthy, yellow for low, red for loss
- ✓Compare with industry benchmarks instantly
- ✓Identify if you're undercharging or overcharging
- ✓Essential tool for product pricing and business planning
- ✓Free — works instantly without any sign-up
Related Tools
Frequently Asked Questions
Everything you need to know
What is profit margin?
Profit margin is the percentage of your revenue that remains as profit after deducting costs. Formula: Profit Margin % = (Profit ÷ Selling Price) × 100. A 40% margin means for every ₹100 you earn, ₹40 is profit.
What is the difference between profit margin and markup?
Profit margin is calculated on the selling price; markup is calculated on the cost price. If cost = ₹500 and selling price = ₹800: Profit = ₹300, Margin = (300/800) × 100 = 37.5%, Markup = (300/500) × 100 = 60%. Margin is always lower than markup for the same transaction.
What is a good profit margin for small businesses?
It varies by industry. Retail: 20-50% gross margin, Restaurants: 60-70% gross margin (but net margin is 3-9%), Services/Consulting: 60-80%, Manufacturing: 25-40%. Net profit margin (after all expenses) of 10-20% is considered healthy for most businesses.
What if my profit margin is negative?
A negative margin means you're selling below cost — you lose money on every sale. Immediately increase prices, reduce costs, or discontinue the product/service. Never sustain negative margin long-term without a clear strategy to make it profitable.
How do I improve my profit margin?
Key strategies: (1) Raise prices — even 5-10% increase significantly impacts margins, (2) Negotiate better supplier rates, (3) Increase average order value through upselling, (4) Reduce operating expenses, (5) Focus on high-margin products/services.