Profit margin calculator
Enter what an item costs you and what you sell it for. You get the profit, the margin (profit as a share of the price) and the markup (profit as a share of the cost). Switch to “Find my price” to get the price that hits a target margin.
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Profit margin
60%
- Profit
- $18.00
- Markup
- 150%
How it's calculated
- Profit
- = price − cost
- Margin
- = profit ÷ price × 100
- Price for a target margin
- = cost ÷ (1 − margin)
Example
An item costs $12 and sells for $30. Profit is $18, the margin is 18 ÷ 30 = 60%, and the markup is 18 ÷ 12 = 150%. To reach a 70% margin on the same item you would need to sell it at 12 ÷ 0.30 = $40.
Margin is not markup
Both use the same profit, divided by different things. Margin divides by the selling price, so it can never reach 100%. Markup divides by the cost, so it often goes past 100%. A 50% markup is only a 33% margin, which is why pricing “cost plus 50%” leaves less room than many sellers expect.
Which costs to include
For a product margin, use everything you pay to put one unit in the customer's hands: the product, packaging and the shipping you pay. Payment fees and ad spend are usually tracked separately; the break-even ROAS and store profit calculators add them for you.
What a good margin looks like
There's no single right number. A store that pays for ads on every order needs room for the ad cost, payment fees and returns after the product cost, so many paid-traffic stores aim well above 50% product margin. Use your own numbers in the break-even ROAS calculator to see what your ads can cost.
FAQ
How do I calculate profit margin?
Subtract the cost from the selling price to get the profit, then divide the profit by the selling price and multiply by 100. $30 price and $12 cost: (30 − 12) ÷ 30 = 60%.
What's the difference between margin and markup?
Margin is profit divided by the selling price; markup is profit divided by the cost. The same $18 profit on a $12 item sold at $30 is a 60% margin and a 150% markup.
How do I find the price for a target margin?
Divide the cost by (1 − target margin). For a 60% margin on a $12 cost: 12 ÷ 0.40 = $30.
Can margin be over 100%?
No. Margin is a share of the price, so it stays under 100%. Markup can be any size.
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