How to Calculate Profit Margin
Margin shows how much of the selling price remains as profit after cost. Learn the formula and why it differs from markup.
What is the Margin Calculator?
Profit is the selling price minus the cost. Margin is that profit divided by the selling price and multiplied by 100, so it shows what share of each sale you keep as profit. The selling price must be above zero, and a price below cost gives a negative margin, meaning a loss.
How to use it
- Enter the cost of the item.
- Enter the selling price.
- Read the profit and the margin percentage.
Worked example
Cost 60, selling price 100: profit 40, margin 40%.
What is the margin on an item that costs 60 and sells for 100?
The profit is 40 and the margin is 40%. Subtract 60 from 100 to get 40, divide 40 by the selling price of 100, and multiply by 100 to get 40%.
Frequently asked questions
What is a good margin?
It depends on the business and its overheads. This tool reports the margin; whether it is enough depends on your other costs.
What does a negative margin mean?
A negative margin means the selling price is below cost, so each sale loses money.