Profit Margin Calculator
Work out your profit margin from cost and revenue, or find the price you need to charge to hit a target margin. Margin is profit as a percentage of the selling price.
The profit margin formula
Margin = (Revenue − Cost) ÷ Revenue × 100
- Subtract the cost from the revenue (selling price) to find the profit, then divide by the revenue — not the cost — so the margin is measured against what the customer pays.
- Multiply by 100 to turn the fraction into a percentage.
- To price for a target margin, rearrange the formula: Selling Price = Cost ÷ (1 − Margin ÷ 100).
How to use this calculator
- Pick “From cost & revenue” to work out a margin, or “Target margin” to find a selling price.
- Enter your cost and revenue — or your cost and the margin you want.
- Margin, profit or required price updates instantly.
Worked examples
Working out a margin from cost and revenue
You sell at £50 with a £30 cost. Profit = £50 − £30 = £20. Margin = 20 ÷ 50 × 100 = 40%. You keep 40% of the selling price as profit.
Pricing for a target margin
You want a 40% margin on a £30 cost. Selling price = £30 ÷ (1 − 0.40) = £30 ÷ 0.6 = £50. The profit per sale is £20.
The same profit, a different margin
You sell at £20 with a £12 cost. Profit = £8. Margin = 8 ÷ 20 × 100 = 40%. The same £8 profit is a 40% margin here but a 66.7% return on cost — margin always divides by the (larger) selling price.
Target margin on a higher-cost item
A product costs £70 and you want a 30% margin. Selling price = £70 ÷ (1 − 0.30) = £70 ÷ 0.7 = £100. The profit per sale is £30.
Why margin is lower than markup
A £40 cost sold at £50 gives a £10 profit. Markup = 10 ÷ 40 × 100 = 25%. Margin = 10 ÷ 50 × 100 = 20%. The same profit is a lower percentage as margin because the selling price is larger than the cost.
Margin, markup and gross margin
These terms are often confused. Here is the difference, in plain English.
- Profit margin
- Profit expressed as a percentage of the selling price. A £20 profit on a £50 sale is a 40% margin.
- Markup
- Profit expressed as a percentage of the cost. The same £20 profit on a £30 cost is a 66.7% markup. Use the markup calculator to work it out.
- Gross margin
- Margin calculated across a whole business using revenue and cost of goods sold. The per-sale formula is the same — use the gross profit calculator for company-level figures.