Profit Margin Calculator
Profit margin with the equivalent markup, because confusing the two is the most expensive arithmetic error in pricing. A 30 percent markup is a 23 percent margin, so pricing at cost plus 30 when you meant a 30 percent margin loses seven points on every sale.
Also called: margin calculator, profit percentage calculator.
30% margin on 1,00,000 of revenue, a profit of ₹30,000. The equivalent markup is 42.86%, which is the same money on a different base. Enter the direct cost separately to split gross margin from net, which answer different questions. Enter a target margin to see the price it requires. Dividing by one less the margin is correct; multiplying by one plus it is the markup error.
How this is calculated
Margin divides profit by revenue and markup divides the same profit by cost. Since revenue is the larger number, the margin is always the smaller percentage, and the gap widens as they rise: a 100 percent markup is a 50 percent margin. Separating direct cost from overhead splits gross margin from net, which matter for different decisions: gross margin says whether the product works and net says whether the business does.
the same profit over a different base, which is why the two numbers never match- R
- Revenue
- C
- Cost
Method and limits
What it assumes
- Costs and revenue for the same period.
What it deliberately does not model
- A blended margin across products hides that some lose money.
- Where overhead is not separated, the single figure is a net margin and not comparable with a gross one.
Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator
Frequently asked questions
- What is the difference between margin and markup?
- The base. Margin divides profit by revenue and markup divides it by cost, so a 30 percent markup is a 23 percent margin. Pricing on the wrong one loses the difference on every sale.
- Should I use gross or net margin?
- Gross to judge whether a product works, since it excludes overhead. Net to judge whether the business does. Quoting one as if it were the other is common and misleading.