What counts as a good profit margin?

It varies widely by industry. Grocery and retail often run on single-digit margins, while software and luxury goods can exceed 50%. The most useful benchmark is your own historical margin and the typical figures for direct competitors in your sector.

Why is margin always lower than markup for the same deal?

Margin divides profit by the larger revenue figure, whereas markup divides the same profit by the smaller cost figure. With a $40 profit, dividing by $100 of revenue gives 40% margin but dividing by $60 of cost gives a higher 66.67% markup.

Is this gross margin or net margin?

This is gross margin, based only on the direct cost of the item versus its revenue. It does not subtract operating expenses, overhead, taxes, or interest, so your net margin after all costs will be lower.

What happens if cost is higher than revenue?

The profit becomes negative and the margin is reported as a negative percentage, signaling a loss on the sale. That is a useful warning that the price does not cover the cost of goods.

Margin Calculator

Cost

Revenue

Profit Margin30.00%

Markup42.86%

Profit$30.00

This margin calculator works backward from a known cost and revenue to reveal your gross profit, your profit margin as a share of revenue, and the equivalent markup over cost. It is built for the common case where you already have a sale price in hand and want to know how profitable it is, rather than setting a price from scratch. Seeing margin and markup side by side helps you sanity-check pricing and compare deals on the same footing.

Formula

Margin% = (Revenue − Cost) / Revenue · 100; Markup% = (Revenue − Cost) / Cost · 100

Revenue: Selling price or sales revenue received
Cost: Cost of goods for the item
Margin%: Gross profit as a percentage of revenue
Markup%: Gross profit as a percentage of cost

How it works

Enter the cost of the item and the revenue (selling price) you received. The calculator subtracts cost from revenue to find the gross profit in currency terms.
It divides that profit by revenue to express the result as a profit margin percentage, the portion of every sales dollar you keep.
It also divides profit by cost to report the markup percentage, so you can see how the same profit looks from the cost side. If revenue is zero or negative, the calculator returns zeros to avoid dividing by an invalid base.

Worked example

An item costs $60 to produce and sells for $100 in revenue.

Gross profit: 100 − 60 = $40.
Profit margin: 40 ÷ 100 × 100 = 40%.
Equivalent markup: 40 ÷ 60 × 100 = 66.67%.

Gross profit is $40, the profit margin is 40% of revenue, and the equivalent markup over cost is 66.67%.

Frequently asked questions

What counts as a good profit margin?: It varies widely by industry. Grocery and retail often run on single-digit margins, while software and luxury goods can exceed 50%. The most useful benchmark is your own historical margin and the typical figures for direct competitors in your sector.
Why is margin always lower than markup for the same deal?: Margin divides profit by the larger revenue figure, whereas markup divides the same profit by the smaller cost figure. With a $40 profit, dividing by $100 of revenue gives 40% margin but dividing by $60 of cost gives a higher 66.67% markup.
Is this gross margin or net margin?: This is gross margin, based only on the direct cost of the item versus its revenue. It does not subtract operating expenses, overhead, taxes, or interest, so your net margin after all costs will be lower.
What happens if cost is higher than revenue?: The profit becomes negative and the margin is reported as a negative percentage, signaling a loss on the sale. That is a useful warning that the price does not cover the cost of goods.

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Markup Calculator Discount Calculator Commission Calculator Break-Even Calculator