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    Profit Margin Calculator

    Calculate profit margin, markup percentage, and selling prices instantly. Perfect for pricing products, quoting services, and analysing business profitability.

    Free to use. Runs in your browser.

    Profit margin = ((Revenue - Cost) / Revenue) × 100. Markup = ((Revenue - Cost) / Cost) × 100. A 50% markup equals a 33.3% margin.

    Enter your numbers below to calculate margin, markup, and profit.

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    £

    Profit Margin Formulas

    • Margin: ((Revenue - Cost) ÷ Revenue) × 100
    • Markup: ((Revenue - Cost) ÷ Cost) × 100
    • Selling Price: Cost ÷ (1 - Margin %)

    Margin vs Markup: The Distinction That Costs Businesses Thousands

    Margin and markup both measure profit, but from different angles. Confusing them is one of the most expensive mistakes in business pricing. If you set a 50% "profit margin" when you actually meant 50% markup, you'll overprice your products by a third.

    Margin is profit as a percentage of the selling price. It answers: "Of every pound I receive, how much is profit?" A 30% margin on a £100 sale means £30 profit.

    Markup is profit as a percentage of the cost. It answers: "How much did I add on top of my cost?" A 50% markup on a £100 cost means you sell for £150.

    Here's the relationship that trips people up: a 50% markup equals only a 33.3% margin. And a 50% margin requires a 100% markup, you'd need to double your cost price.

    Markup to Margin Conversion Table

    Markup %Margin %On £100 CostProfit
    15%13.0%Sells for £115£15
    25%20.0%Sells for £125£25
    50%33.3%Sells for £150£50
    75%42.9%Sells for £175£75
    100%50.0%Sells for £200£100
    200%66.7%Sells for £300£200

    What this means for you: Margin is always lower than markup for the same profit amount. That's because margin divides by revenue (a larger number), while markup divides by cost (a smaller number). When someone quotes you a "margin," check which definition they're using.

    Typical Profit Margins by Industry

    IndustryTypical Gross MarginTypical Net MarginWhy
    Software / SaaS70 to 90%15 to 30%Near-zero marginal cost per user
    Consulting50 to 70%15 to 25%Main cost is labour (people)
    Manufacturing25 to 40%5 to 10%Raw materials + equipment costs
    Retail (general)25 to 50%2 to 5%High overheads, thin margins on volume
    Restaurants60 to 70%3 to 9%High food cost + rent + labour
    Supermarkets25 to 30%1 to 3%Massive volume, razor-thin margins

    What this means for you: "Good" margin depends entirely on your industry. A 5% net margin is excellent for a supermarket but disastrous for a SaaS company. Compare yourself to your sector, not to businesses in completely different markets.

    Gross Margin vs Net Margin vs Operating Margin

    Gross Margin

    Revenue minus direct costs of goods sold (COGS). Includes materials, production labour, and shipping. Ignores overheads like rent, marketing, and admin. This is what the calculator above computes.

    Operating Margin

    Gross profit minus operating expenses (rent, salaries, marketing, utilities). Shows how efficiently your core business runs before interest and tax. Also called EBIT margin.

    Net Margin

    The bottom line, what's left after ALL expenses including tax, interest, depreciation, and one-off costs. This is the truest measure of profitability, but also the most volatile.

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    How to use this tool

    1

    Select your calculation mode: Cost + Revenue, Cost + Margin, or Revenue + Margin

    2

    Choose your currency from the dropdown

    3

    Enter the values you know

    Common uses

    • Setting product prices with target profit margins
    • Converting between markup and margin percentages
    • Comparing profitability across different products or services
    • Quoting project costs with desired margin built in
    • Analysing whether a business or product line is profitable

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    Frequently Asked Questions

    What is profit margin?
    Profit margin is the percentage of revenue that remains as profit after deducting costs. Formula: Margin = ((Revenue - Cost) / Revenue) x 100. A 30% margin means 30p of every £1 in sales is profit. It's the most common measure of business profitability.
    What's the difference between margin and markup?
    Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. Example: £10 cost, £15 revenue = 33.3% margin but 50% markup. They measure the same profit from different perspectives, margin divides by a bigger number, so it's always lower.
    What is a good profit margin?
    It depends entirely on your industry. Software/SaaS averages 70-90% gross margin. Consulting runs 15-25% net. Retail averages 2-5% net. Supermarkets survive on 1-3%. Compare yourself to your sector, not to other industries.
    How do I calculate selling price from cost and margin?
    Selling Price = Cost / (1 - Margin%). For a £10 cost and 30% target margin: £10 / (1 - 0.30) = £10 / 0.70 = £14.29. Do NOT just add 30% to the cost, that gives you a 30% markup, which is only a 23% margin.
    Why is my margin always less than my markup?
    Because margin uses revenue (a larger number) as the denominator, while markup uses cost (a smaller number). A 50% markup gives a 33.3% margin. A 100% markup gives a 50% margin. They converge only at 0%.
    What's the difference between gross margin and net margin?
    Gross margin subtracts only direct costs (materials, production labour). Net margin subtracts everything, rent, salaries, marketing, tax, interest, depreciation. A business can have a healthy 60% gross margin but a struggling 3% net margin if overheads are high.
    How do I convert between markup and margin?
    Margin to markup: Markup% = Margin% / (1 - Margin%). Markup to margin: Margin% = Markup% / (1 + Markup%). Example: 25% margin = 33.3% markup. 50% markup = 33.3% margin. The calculator above does this conversion automatically.
    What margin do I need to cover my overheads?
    Your gross margin needs to cover all operating expenses plus your desired profit. If your annual overheads are £100,000 and you want £50,000 profit, you need £150,000 in gross profit. At 40% gross margin, that requires £375,000 in revenue.
    Should I use margin or markup for pricing?
    Markup is simpler for cost-plus pricing, add a percentage to your cost. Margin is better for financial analysis and comparing profitability. Accountants and investors typically talk in margins. Retail buyers and purchasing teams typically think in markups.
    Can profit margin be negative?
    Yes, a negative margin means you're selling below cost. This happens during clearance sales, loss-leader strategies, or when costs unexpectedly rise above your selling price. Some businesses intentionally sell at a loss to acquire customers, planning to profit on repeat purchases.
    What is contribution margin?
    Contribution margin is revenue minus variable costs only. It shows how much each sale contributes toward covering fixed costs and generating profit. It's useful for break-even analysis: Break-even units = Fixed Costs / Contribution Margin per Unit.
    How do I improve my profit margin?
    Two levers: increase revenue per unit (raise prices, upsell, bundle) or reduce costs (negotiate with suppliers, reduce waste, automate). A 1% margin improvement on £1M revenue adds £10,000 straight to the bottom line.
    How does profit margin reporting differ between the UK, US, Canada, and Australia?
    In the UK, HMRC and Companies House require published accounts to show gross and net margin under FRS 102 or IFRS. In the US, the IRS and SEC use GAAP definitions, gross, operating, and net margin are standard. In Canada, the CRA and CPA Canada accept IFRS and ASPE, both reporting gross/operating/net. In Australia, the ATO requires AASB-aligned accounts. The formulas are identical everywhere, only tax treatment differs.
    Can I use this for a halal business or Islamic pricing?
    Yes. The margin and markup maths are identical. If your business follows Shariah principles, keep in mind that Islamic finance avoids riba (interest), so pricing should be transparent, not loaded with hidden financing costs. Many UK, US, Canadian, and Australian Muslim businesses price at honest margins and avoid compound-interest-based financing.

    Results are for general informational purposes only and should be checked before use. They are not professional advice. See our Disclaimer and Terms of Service.