If you sell anything, profit margin tells you how much of each sale you actually keep. It sounds like accounting jargon, but the math is genuinely simple once you see it.
The formula
Margin is your profit as a share of the selling price:
- Profit = Selling price − Cost
- Margin % = (Profit ÷ Selling price) × 100
So if something costs you $60 and you sell it for $100:
- Profit = $100 − $60 = $40
- Margin = (40 ÷ 100) × 100 = 40%
Margin vs. markup (the part that trips people up)
These two get mixed up constantly:
- Margin is profit over the selling price → (40 ÷ 100) = 40%
- Markup is profit over the cost → (40 ÷ 60) = 66.7%
Same $40 profit, two very different percentages. When a supplier says "50% markup" and you assume "50% margin," your numbers will be off. Always check which base is being used.
Working backwards from a target margin
Often you don't know the price yet — you know your cost and the margin you want. Rearrange the formula:
- Price = Cost ÷ (1 − Margin%)
Want a 40% margin on a $60 item? Price = 60 ÷ (1 − 0.40) = $100.
Skip the math
Our Margin Calculator does all of this instantly — enter cost and price to get your margin, or enter a target margin to get the price. No formulas to remember, no spreadsheet.
It's free and takes one tap. Price your next product with confidence.