Free profit margin calculator
Enter your cost and price for profit, margin and markup, or the margin you want for the price that delivers it.
Enter details
Cost ($)
Selling price ($)
Quantity sold
Fixed costs ($)
Quick examples
Your profit estimate
$50.00
Profit - $100 cost $150 price
Profit = Selling - Cost = 150 - 100 = $50. Margin = Profit / Selling * 100 = 50 / 150 * 100 = 33.33%. Markup = Profit / Cost * 100 = 50 / 100 * 100 = 50%
Watch the calculator fill itself in
The same panel you used above, pricing a $40 item three ways: from a price you have in mind, from the margin you need, and from a markup. Every figure on the right updates as the fields are typed.
Your profit estimate
$0.00
Profit per unit
Margin = Profit / Selling price * 100
If you discount
Start with a $40 cost
Jump to any part to replay it. The formulas behind these numbers are set out further down the page.
Gross, operating and net profit margin: which one is this?
Three different numbers share the name, and quoting the wrong one is how a business that looks profitable per job runs out of money. The calculator above works out the first.
Gross profit margin
(Revenue − COGS) ÷ Revenue × 100This is what the calculator gives you. Cost of goods sold means the direct cost of what you sold: materials, the hours that went into it, delivery. Nothing else. It tells you whether the price on a job or a product is right.
Operating profit margin
Operating profit ÷ Revenue × 100Gross profit after the costs of running the business: rent, software, insurance, wages that are not on a job. It answers whether the whole operation works, not whether one price does.
Net profit margin
Net profit ÷ Revenue × 100Everything taken off, including interest and tax. It is the figure a lender or an accountant means, and it is always the smallest of the three.
A 40% gross margin can still leave a business losing money, because gross margin has not paid the rent yet. Price with gross margin, check the health of the business with net.
How to use your profit margin when you quote and invoice
A margin only exists if the paperwork holds it. These are the four places a healthy number on this page quietly turns into a smaller one by the time you are paid.
Price the quote, not the invoice
The margin is decided when you send the price, not when you bill. Work out the figure here, then put it in writing with what is included and what is not, because most margin is lost to work that was assumed rather than quoted.
Add 40% instead of dividing and you would quote $140, a 28.6% margin. The quote generator keeps the line items you priced.
Every line carries its own margin
Labor, materials, disposal and call-out rarely earn the same. Pricing them as one blended number is how a job heavy on materials ends up earning almost nothing while the invoice still looks healthy.
Run the margin per line here, then itemize them on the invoice so you can see afterwards which part of the work paid.
A discount is not a small thing
On a 30% margin, taking 10% off the price removes a third of the profit on that sale, so you would need to sell half as much again to end up where you started. If you must move, move the scope rather than the price.
Where a client is pushing for a lower number, a deposit and staged payments on the quote are usually worth more to them than the discount, and cost you nothing.
Late payment eats the margin you calculated
Money owed for 60 days is money you are financing. On thin margins the cost of waiting can exceed the profit on the job, which is the point at which a healthy-looking margin is fiction.
Invoice the day the work finishes, put the due date and late fee on the page, and price a known slow payer at a margin that covers the wait.
A margin is a decision, not a calculation
The number on this page is only real once it survives the quote, the job and the wait to be paid. These are the three documents that decide whether it does, and the other two are free here as well.
Set the margin
Cost in, margin out, or name the margin you need and take the price it gives you. Check it per line rather than across the whole job.
You are hereQuote at that price
Put the price in writing with what is included, a deposit and a valid-until date, so the figure you calculated is the figure you are held to.
Open the Quote GeneratorInvoice and collect
Bill the day the work is done, with terms, a due date and a stated late fee. Waiting 60 days for payment can cost more than the job earned.
Open the Invoice GeneratorBorrowing to cover the gap between doing the work and being paid? The loan calculator prices that properly, fees included, so you can compare it against simply asking for a deposit.
Quick margin, markup, selling price and break-even calculators
Four quick answers, each with a link back to the full calculator above.
Work out a margin
Full calculatorProfit: $50 | Margin: 33.33% | Markup: 50%
Work out a markup
Full calculatorSelling price: $150 | Profit: $50 | Margin: 33.33%
Price from a target margin
Full calculatorSelling price: $142.86 | Profit: $42.86 | Formula: Cost / (1 - Margin)
Find the break-even point
Full calculatorBreak even: 200 units | Contribution: $50 per unit
| Cost | Price | Profit | Margin | Markup | ROI |
|---|
| Margin % | Markup % | Example on a $100 cost | Selling price |
|---|
How to calculate profit margin in three modes
Price mode: enter cost and selling price
Input cost $100 and selling price $150. Calculator shows profit $50, margin 33.33 percent = 50 / 150 * 100, markup 50 percent = 50 / 100 * 100, ROI 50 percent.
Margin mode: enter cost and the margin you want
Input cost $100 and desired margin 30 percent. Calculator computes selling price $142.86 = 100 / (1 - 0.3), profit $42.86, markup 42.86 percent.
Markup mode: enter cost and a markup
Input cost $100 and markup 50 percent. Calculator computes selling price $150 = 100 * (1 + 0.5), profit $50, margin 33.33 percent.
Enter quantity and fixed costs
Enter quantity sold 100 units to see total profit $5,000 = $50 * 100. Enter fixed costs $2,000 to see break even 40 units = 2000 / 50 contribution.
Review results and export
View profit, margin, markup, ROI, total profit, break even, cost vs profit bar. Copy the figures, or carry the price straight into an invoice or a quote with the buttons under the result.
Profit margin examples by industry
Retail example: 33% margin
Cost $100 | Selling $150 | Profit $50 | Margin 33.33% | Markup 50% | ROI 50%
Total profit 100 units = $5,000 | Fixed $2,000 break even 40 units
Restaurant dish example: 66% margin
Cost $5 | Selling $15 | Profit $10 | Margin 66.67% | Markup 200% | ROI 200%
Total profit 200 plates = $2,000 | Fixed $1,000 break even 100 plates
This is the margin on the food alone; staff and rent come out of it afterwards.
Software example: 80% margin
Cost $20 | Selling $100 | Profit $80 | Margin 80% | Markup 400% | ROI 400%
Total profit 500 users = $40,000 | Fixed $10,000 break even 125 users
High because each extra user costs little to serve.
Construction example: 20% margin
Cost $80,000 | Selling $100,000 | Profit $20,000 | Margin 20% | Markup 25% | ROI 25%
Total profit 10 jobs = $200,000 | Fixed $50,000 break even 2.5 jobs
How is profit margin calculated? Margin and markup formulas
Profit margin formula
Profit = Selling - Cost. Margin = Profit / Selling * 100%. Example $100 cost $150 selling profit $50 margin 50 / 150 * 100 = 33.33%. Margin shows percent of selling price that is profit.
Markup formula
Markup = Profit / Cost * 100%. Example $100 cost $150 selling profit $50 markup 50 / 100 * 100 = 50%. Markup shows percent added to cost. Margin is always lower than markup.
Selling price from margin
Selling = Cost / (1 - Margin). Example $100 cost 30% margin selling = 100 / (1 - 0.3) = 100 / 0.7 = $142.86. Useful when you know desired margin.
Selling price from markup
Selling = Cost * (1 + Markup). Example $100 cost 50% markup selling = 100 * 1.5 = $150. Useful when you know markup to apply.
Break even formula
Contribution margin = Selling - Variable cost. Break even units = Fixed costs / Contribution margin. On $10,000 of fixed costs with $50 of contribution per sale, that is 200 units before any of it is profit. Break even dollars = break even units * selling price.
ROI vs margin
ROI = Profit / Cost * 100% same as markup. Margin = Profit / Selling * 100%. Example $100 cost $50 profit ROI 50% margin 33.33%. Use margin for pricing, ROI for investment return.
Profit margin and markup questions, answered
Margin, markup, profit and price, answered briefly.
How do you calculate profit margin?
Subtract the cost from the selling price to get the profit, divide the profit by the selling price, and multiply by 100. On a $100 cost and a $150 price the profit is $50, and 50 divided by 150 is a 33.33% profit margin. The calculator above does it as you type.
What is the difference between margin and markup?
Margin is profit divided by the selling price; markup is profit divided by cost. The same $50 of profit on a $100 cost and a $150 price is a 33.33% margin and a 50% markup. Because the price is always bigger than the cost, margin is always the smaller number, which is also why profit margin is calculated on revenue, not on cost. To convert: margin = markup / (1 + markup), and markup = margin / (1 - margin).
How do I calculate profit?
Selling price minus cost. $150 minus $100 is $50 of profit on one sale, and 100 sales at that price is $5,000. Enter a quantity above to see the total.
What is profit percentage?
Usually profit as a percentage of cost, which is the same figure as markup or return on cost: $50 of profit on a $100 cost is a 50% profit percentage. Some people mean profit as a share of the price, which is margin (33.33% here). Say which one you mean when you quote it.
Can profit margin be negative?
Yes. If the selling price is below the cost, profit is negative and so is the margin: a $100 cost sold at $80 is a -25% margin. The calculator shows it, and it is the signal to change the price or the cost before selling more.
What is a good profit margin?
It depends on what the cost figure includes and on the business. A gross margin only has to cover direct costs, so it needs to be large enough to pay rent, wages and your own time before anything is profit. Products that cost little to deliver, such as software, run much higher margins than goods resold at a small markup. The useful test is your own: does the margin pay your overhead with something left over?
How do I calculate break-even units?
Divide fixed costs by the contribution each sale makes, which is the selling price minus the variable cost. $10,000 of fixed costs at $50 per sale is 200 units, or $30,000 of sales at a $150 price. Enter fixed costs above to see it, or use the break-even calculator for revenue, invoices a month and margin of safety.
How do I calculate ROI, and how is it different from margin?
Divide the profit by what you spent and multiply by 100. A $100 cost and $50 profit is a 50% return on cost but a 33.33% margin. On a single sale ROI is the same number as markup; margin divides by the price instead. Lenders and partners tend to ask for the first, accountants for the second.
How much is 50 percent markup in margin?
50 percent markup equals 33.33 percent margin. Formula margin equals markup divided by 1 plus markup. 0.5 divided by 1.5 equals 33.33 percent. Conversely 33.33 percent margin equals 50 percent markup. The reverse formula is markup = margin / (1 - margin).
Is 30% a good profit margin?
For most service businesses it is healthy; for retail it is strong; for wholesale it would be unusual. What matters more than the benchmark is whether the margin covers your overhead once unbilled time, insurance, equipment and quiet weeks are counted.
How do I calculate selling price from cost and margin?
Divide the cost by one minus the margin, not add the margin to the cost. For a 40% margin on a $100 cost that is 100 / 0.6 = $166.67; adding 40% gives $140, which is only a 28.6% margin. Margin mode above does the division for you.
What margin should I use on materials I buy for a client?
Anything from 10 to 25% is common, and it is not a mark-up for its own sake: it covers sourcing, collection, storage, breakage and the cash you have tied up until the invoice is paid.
How do I work out margin on an hourly rate?
Treat your true hourly cost as the cost figure: wages, tax, tools and the hours you cannot bill. If a chargeable hour actually costs $45 to deliver and you bill $75, the margin is 40%.
What is the difference between gross and net margin?
Gross margin takes off only the cost of goods sold, the direct cost of what you sold. Net margin takes off everything else too: rent, wages, software, interest and tax. This calculator works out gross margin per item or job; gross tells you whether a price is right, net tells you whether the business is.
Does a discount cost more than it looks?
Far more, because it comes entirely out of profit rather than out of the price. Put your own figures in above and the discount rows show exactly what 5% and 10% off leave you with, which is usually the moment people stop offering them casually.
How do I include VAT or sales tax?
Leave it out. Tax you collect is not yours, so margin should be calculated on the price excluding tax, or the margin will read higher than it is.
Should every line on an invoice carry the same margin?
Rarely. Labor usually carries more than materials, and call-out or disposal charges often carry very little. Pricing each line on its own margin is what stops a job with heavy materials from quietly earning nothing.
A client wants a discount. How do I set the price?
Work backwards from the lowest margin you can accept rather than down from your price: put the cost in here and that margin, and the price it gives you is your floor. Then offer something that costs you less than the profit does, such as a smaller scope, a longer lead time or payment up front, so the margin you calculated survives the conversation.
What margin covers unpaid invoices?
If one invoice in twenty goes bad, every other job needs to carry that loss. On a 30% margin, a 5% write-off rate takes roughly a sixth of your profit, which is an argument for deposits and clear payment terms rather than for higher prices.
Can margin be more than 100%?
No. Margin is profit as a share of the selling price, so it approaches 100% but cannot reach it. Markup has no ceiling: a $5 cost sold at $50 is a 900% markup and a 90% margin.
How do I calculate margin on a subscription or retainer?
Use the monthly figures: what delivering the service costs you each month against what the client pays each month. Long agreements are worth checking every quarter, because costs drift while the retainer stays put.
How much should I raise prices to keep the same margin after a cost increase?
By the same percentage as the cost rise. On a 30% margin, a $70 cost that rises 10% to $77 needs a $110 price, 10% up, to keep the 30% margin. A 7% rise to $107 keeps the same $30 of profit per sale but lets the margin slip to 28%.
Is the profit margin calculator free and private?
Yes. There is no signup and nothing is uploaded: every figure is worked out in your browser and disappears when you close the tab.
What margin should I quote a client?
Work back from what the job costs you, including unbilled time, then add the margin your business needs rather than the one you think the client expects. Price the quote at that figure and hold it: negotiating scope protects the margin, negotiating price does not.
How do I show margin on an invoice?
You do not. Clients see prices, not your costs. Keep the margin working in the background and itemize the invoice by what was delivered, which is also what makes it easy to check afterwards which lines actually paid.
How do late payments affect my margin?
Every day an invoice is unpaid is a day you are financing the client. On a thin margin, 60 day terms can cost more than the job earned, so clear due dates and a stated late fee are part of pricing, not an afterthought.
Should deposits change the price I quote?
They change the risk, not the cost, so they rarely justify a lower margin. What a deposit does is remove the financing cost and the chance of not being paid, which is often worth more than the discount a client is asking for.
What is COGS and what should I include in it?
Cost of goods sold is the direct cost of delivering the thing you sold: materials, the labor that went into it, and delivery. Leave out rent, insurance, software and your own admin time, which belong in operating costs.
Does profit margin include labor and overhead?
Gross margin includes the labor that went into the job, because it is a direct cost, but not overhead such as rent or software. Net margin includes both. If you enter a cost that already contains a share of overhead, the margin here is closer to a net figure for that job.