Profit Margin Calculator
Profit margin and markup are two of the most commonly confused business metrics, and getting them wrong can mean mispricing products or misreading financial reports. Enter your cost and selling price (revenue), and this calculator shows both side by side: gross margin percentage ((revenue - cost) / revenue), markup percentage ((revenue - cost) / cost), and the absolute profit or loss amount.
Gross margin tells you what percentage of revenue is profit — it's the metric investors, lenders, and financial analysts use. Markup tells you how much you added on top of cost — it's the metric you use when setting prices. A product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup; confusing the two is a common and costly mistake.
Useful for pricing decisions, financial reporting, and quick sanity checks on product economics. Everything runs in your browser — no data is sent anywhere.
By The Paper Room Editorial Team — Financial & Utility Tools
Frequently asked questions
What's the difference between margin and markup?▼
Margin is profit as a percentage of revenue (selling price): (revenue - cost) / revenue. Markup is profit as a percentage of cost: (revenue - cost) / cost. A 50% markup on a $100 cost gives a $150 price, but that's only a 33.3% margin. Margin is always lower than markup for the same product.
What's a good profit margin?▼
It varies enormously by industry. Software companies often have 70-90% gross margins; grocery stores operate on 1-3%; restaurants typically see 3-9%; and retail averages 25-50%. Compare your margin to industry benchmarks rather than a universal 'good' number.
Is this gross margin or net margin?▼
This calculates gross margin — revenue minus direct cost of the product. Net margin would subtract all operating expenses (rent, salaries, marketing, taxes, etc.) from revenue, which requires more data than just cost and selling price. The profit amount shown here is gross profit, not net profit after all expenses.