Free business calculator
Profit Margin Calculator
Calculate profit, profit margin, markup, profit per unit, and the selling price needed to reach a target margin.
Profit Margin Calculator
Enter your cost, selling price, quantity, and optional costs to calculate profit, margin, markup, and profit per unit.
Cost to buy or produce one unit.
Price charged for one unit.
Number of units sold.
Extra order-level costs such as packaging, fees, or handling.
Target Selling Price
Work backward from a desired profit margin to find the required selling price.
Cost to buy or produce one unit.
The margin you want on the final selling price.
Required Selling Price
$100.00
Required selling price = cost price / (1 - desired margin).
Guide
Understanding Profit Margin
What is Profit Margin?
Profit margin is the percentage of revenue left as profit after costs are subtracted. It helps business owners understand how much room they have for discounts, operating expenses, and growth costs like advertising.
Profit Margin Formula
Revenue = Selling Price x Quantity
Total Cost = Cost Price x Quantity + Additional Costs
Profit = Revenue - Total Cost
Profit Margin % = Profit / Revenue x 100
Markup % = (Selling Price - Cost Price) / Cost Price x 100
Profit Per Unit = Profit / Quantity
Profit Margin vs Markup
Profit margin measures profit as a share of revenue. Markup measures how much selling price is raised above cost. For example, a product that costs $40 and sells for $100 has a 60% margin but a 150% markup.
Example
If a product costs $40, sells for $100, and you sell 10 units with $25 in additional costs, revenue is $1,000 and total cost is $425. Profit is $575, profit margin is 57.50%, and profit per unit is $57.50.
How to Calculate Selling Price from Margin
To calculate selling price from margin, divide cost price by one minus the desired margin. A $40 cost with a 60% desired margin needs a $100 selling price because $40 / (1 - 0.60) = $100.
Using Margin with Advertising Calculators
Profit margin is also the foundation for ad targets. Once you know your margin, you can estimate how much room you have for acquisition cost with the Break-Even ROAS Calculator or set a profitable campaign goal with the Target ROAS Calculator.
Frequently Asked Questions
What is a good profit margin?
A good profit margin depends on the industry, product type, and growth strategy. The important part is comparing your margin against your costs, pricing, and advertising goals.
Why is markup different from margin?
Markup compares profit to cost, while margin compares profit to revenue. Because they use different denominators, a 50% markup is not the same as a 50% margin.
Should additional costs be included?
Yes. Add order-level costs such as packaging, payment fees, handling, or marketplace fees when they affect the real profit from a sale.
Can I use this for services?
Yes. Use your service delivery cost as the cost price and include any project-specific costs as additional costs.