B/Billable Toolkit
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Profit Margin Calculator

Margin and markup are not the same number. Enter your cost and price to see both, or set a target margin to get the price.

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Result

How it’s calculated

Margin is profit as a share of the selling price. Markup is profit as a share of cost. A 50% markup is only a 33.3% margin.

margin = (price − cost) ÷ price markup = (price − cost) ÷ cost price for target margin = cost ÷ (1 − margin)

Worked example

An item that costs $40 and sells for $65 makes $25 profit. That is a 38.5% margin but a 62.5% markup. To reach a 40% margin, the price has to be $66.67.

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Questions

What is a good profit margin?

It depends heavily on the industry. Service businesses often run 20–50% gross margins; retail is usually lower.

Why is my margin lower than my markup?

Margin divides profit by the larger number (price), markup divides by the smaller one (cost), so margin is always lower.

Doing these numbers every month? Accounting software can automate invoices, reminders and tax reports.

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