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Profit margin and markup calculator

Enter what an item costs you and what you sell it for, or choose the margin you want and get the price. Margin and markup are shown side by side, because they're not the same number.

Cost per itemSelling price (before tax)Sales tax / VAT%Currency

Profit per item$8.00

Margin (of price)40%profit ÷ selling price

Markup (on cost)66.7%profit ÷ cost

Price multiplier× 1.67

The full guideHow to calculate profit margin (and markup) with examples

Margin vs markup

Both start from the same profit per item, selling price − cost, but divide it by different things:

Margin = profit ÷ selling price. It tells you what share of each sale you keep.
Markup = profit ÷ cost. It tells you how much you added on top of what you paid.

An item bought for $12 and sold for $20 makes $8: a 40% margin but a 66.7% markup. Confusing the two is the most common pricing mistake: adding a 40% markup to a $12 cost gives $16.80, which is only a 28.6% margin.

Pricing from a target margin

To reach a margin m, divide the cost by (1 − m): for a 40% margin on a $12 item, $12 ÷ 0.6 = $20. The conversion between the two is markup = margin ÷ (1 − margin).

Always calculate before tax

Sales tax or VAT isn't yours: you collect it and pass it on. Work out margins on prices excluding tax, then add the tax to get the shelf price.

Gross margin isn't profit

This calculator gives the gross margin on an item. Card fees, delivery, rent and your own time still come out of it. In Aswath Damodaran's January 2026 data for US-listed companies, grocery retailers have a 26.3% gross margin but a 1.3% net margin.

Read the full guide: how to calculate profit margin.

Frequently asked questions

What's a good profit margin?

It depends on the trade. Compare with businesses like yours, and remember that a high gross margin can still hide a loss once fees and fixed costs are paid.

How do I convert markup to margin?

Margin = markup ÷ (1 + markup). A 50% markup is a 33.3% margin; a 100% markup is a 50% margin.

Should shipping be in the cost?

Yes, if you pay it to get the item in stock: the cost is everything you paid to have it ready to sell.

Put it into practice

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