Use AixKit's free Profit Margin Calculator to calculate margin %, markup %, selling price, and profit instantly. Five modes cover every pricing and margin sc...
Profit margin is the percentage of revenue that remains as profit after deducting the cost of the goods or services sold. It is one of the most important metrics in business and pricing — a number that tells you how much value you are actually keeping from every sale you make.
This calculator uses standard profit margin formulas used in real-world pricing, invoicing, and financial planning.
Profit = Selling Price − Cost Price
Margin % = (Profit ÷ Selling Price) × 100
This calculator focuses on gross profit margin — the figure most relevant to product pricing, selling strategy, and day-to-day business decisions. For related percentage-based calculations, the Percentage Calculator is a useful companion.
Margin and markup are both derived from the same numbers — cost price and selling price — but they are not the same thing, and confusing them is one of the most costly pricing errors a business can make.
| Factor | Margin | Markup |
|---|---|---|
| Based on | Selling price | Cost price |
| Formula | (Profit ÷ Selling Price) × 100 | (Profit ÷ Cost Price) × 100 |
| Always lower than | Markup (for same numbers) | Margin (for same numbers) |
| Used by | Finance, accounting, investors | Sales, procurement, retail buyers |
| Example (Cost 70, Sell 100) | 30% | 42.86% |
Cost Price: 350 | Selling Price: 500
Profit: 500 − 350 = 150
Margin % = (150 ÷ 500) × 100 = 30% — profit as a share of selling price
Markup % = (150 ÷ 350) × 100 = 42.86% — profit as a share of cost price
The key rule: margin is always lower than markup when both are positive. A salesperson who quotes a 50% markup has not created a 50% margin — the actual margin is approximately 33.3%. This gap widens as the percentage rises. Always confirm which figure your supplier, buyer, or accountant is using before building a price.
Profit = Selling Price − Cost Price
Margin % = (Profit ÷ Selling Price) × 100
Markup % = (Profit ÷ Cost Price) × 100
Selling Price = Cost Price ÷ (1 − Margin% ÷ 100)
Selling Price = Cost Price × (1 + Markup% ÷ 100)
Profit = Revenue − Total Cost
Margin % = (Profit ÷ Revenue) × 100
Margin % = (Profit ÷ Revenue) × 100
Cost = Revenue − Profit
Markup % = (Profit ÷ Cost) × 100
Retailers and online sellers typically work backward from a target margin. Once a product cost is known, the calculator tells them the selling price required to hit that margin. This prevents underpricing, which erodes profit, and overpricing, which kills conversion rates. On marketplaces like Amazon or Shopify, platform fees must be factored into cost before calculating margin.
Wholesalers apply markup to cost to determine trade prices and then check whether the resulting margin is sustainable. A 50% markup sounds strong but produces only a 33% margin — knowing both figures helps negotiate with suppliers and set realistic price tiers for volume orders.
Freelancers and service businesses define cost as labour time plus tools or materials. Applying a target margin ensures the quoted project rate is profitable, not just busy. Service margins are typically higher than product margins because COGS is lower, but overheads like software, hardware, or office space still need to be factored in.
Investors and accountants review margin as a health indicator. Consistent gross margins above industry benchmarks signal strong pricing power. Declining margins over quarters indicate rising costs or pricing pressure. The GST-free or pre-tax selling price is the correct input when comparing margins across periods. Use the GST Calculator to separate tax from price before running margin analysis.
At zero margin, selling price equals cost. Any margin above zero contributes to covering fixed overheads. Understanding the minimum margin needed to cover fixed costs helps set a pricing floor below which selling is unprofitable.
Choosing the right metric depends on who you are communicating with and what decision you are making.
In practice, most pricing decisions start with markup (since cost is what you know) and then check margin (to confirm the result is sustainable). This calculator gives you both in every mode so you can work in whichever direction suits your situation.
For loan-based business finance decisions, the Loan Calculator and Interest Calculator are useful tools for understanding the cost of capital that affects your margin targets.
Scenario: A clothing retailer buys a jacket for 80 and wants a 55% margin.
Selling Price = 80 ÷ (1 − 0.55) = 80 ÷ 0.45 = 177.78
Profit = 177.78 − 80 = 97.78
Markup = (97.78 ÷ 80) × 100 = 122.2%
Scenario: Product cost 120; platform fee 15% of selling price; target margin 25%.
Effective cost = 120 ÷ (1 − 0.15 − 0.25) = 120 ÷ 0.60 = 200 selling price required
After platform fee (15% of 200 = 30): Net revenue = 170; Profit = 170 − 120 = 50; Margin = 29.4%
Always include platform fees and payment processing costs in your cost base before setting price.
Scenario: A wholesaler buys in bulk at 45 per unit and applies a 60% markup to set trade price.
Trade Price = 45 × 1.60 = 72
Profit per unit = 27 | Margin = (27 ÷ 72) × 100 = 37.5%
Scenario: A freelance designer quotes a project. Time + software costs = 600; they want a 40% margin.
Project Quote = 600 ÷ (1 − 0.40) = 600 ÷ 0.60 = 1,000
Profit = 400 | Markup on cost = 66.7%
For pricing decisions that include tax, use the GST Calculator after setting your margin to determine the final GST-inclusive price to show customers. For discount scenarios, the Discount Calculator helps model promotional pricing impact on margin.
There is no universal answer — a good margin depends heavily on industry, business model, and competitive environment. Here are common gross margin benchmarks by sector:
Use your industry benchmark as a floor, not a ceiling. If your margin sits well below the benchmark, inspect whether your cost base is too high or your pricing is too low. Small margin improvements across a high volume of transactions produce significant profit gains.
Try different cost and price combinations in the calculator above to instantly see how margin and markup change across scenarios.