Profit Margin Calculator

Profit margin and markup are two different ways to express the same profit, and confusing them is one of the most common mistakes in business. This calculator shows both metrics side by side so you can communicate clearly with your team and stakeholders.

Margin is profit as a percentage of the selling price (revenue). Markup is profit as a percentage of the cost. For example, buying at $30 and selling at $50 gives you a 40% margin but a 66.7% markup — same $20 profit, different denominators.

Margin is typically used in financial reporting and when discussing overall business performance. Markup is more common in retail and when setting prices from a cost basis. A healthy margin varies dramatically by industry: grocery stores may operate on 2-3% net margins, while software companies often achieve 70-80%.

To convert between the two: Margin = Markup / (1 + Markup) and Markup = Margin / (1 - Margin). Understanding this relationship is essential for pricing strategies and profitability analysis.