Margin Calculator

What this margin calculator does

This calculator finds the profit, profit margin, and markup of a product or service from its cost and revenue. Profit is the difference between revenue and cost. Margin expresses profit as a percentage of revenue, while markup expresses it as a percentage of cost.

Margin and markup are related but not the same. A 25% margin is equivalent to a 33.33% markup on cost, which is why using the wrong measure can lead to pricing mistakes.

How to use this calculator

1. Enter the cost of the item.
2. Enter the revenue or selling price.
3. Click Calculate.

The default example has a $120 cost and $160 revenue. The profit is $40, the margin is 25%, and the markup is 33.33%.

Margin and markup formulas

Profit = Revenue − Cost
Margin = Profit / Revenue × 100
Markup = Profit / Cost × 100

Revenue must be greater than zero. A negative profit means the item is being sold below cost; the calculator still reports the loss, margin, and markup.

What the results include

• Profit: revenue minus cost.
• Margin: profit as a percentage of revenue.
• Markup: profit as a percentage of cost.
• Cost and revenue: the inputs used in the calculation.
• Cost/profit bar: a visual split of revenue between cost and profit.

Assumptions and limitations

The calculator uses a single product's cost and revenue and does not include overhead, shipping, payment processing, taxes, or volume discounts. The Stock Trading Margin and Currency Exchange Margin sections of the reference page are not included in this version.

Frequently asked questions

What is the difference between margin and markup?

Margin divides profit by revenue, while markup divides profit by cost. For the same transaction, markup is always higher than margin when there is a profit.

Can margin be negative?

Yes. If revenue is below cost, profit is negative and both margin and markup are negative. The calculator shows the loss rather than blocking the result.

How do I set a target margin?

To set a target margin, divide cost by (1 − target margin) to estimate the required price. For example, a 25% margin on a $120 cost requires a $160 price.

Does this include operating expenses?

No. It compares direct cost with revenue. Operating expenses, taxes, and financing costs are not included.

Source

References:

• U.S. Small Business Administration — Financial Statements
• IRS — Small Business and Self-Employed

Disclaimer

This calculator is for informational and planning purposes only. It is not accounting or tax advice. Confirm costs and pricing with your accountant.