Profit Margin Calculator
Accurately assess your business profitability across individual products or entire inventory catalogues. This tool calculates gross profit, margin percentage on selling price, and corresponding markup percentage over acquisition cost to prevent unprofitable underpricing.
Wholesale acquisition cost, manufacturing expense, or materials
Retail price charged to customer
Percentage of revenue kept as gross profit after cost of goods
How to Use This Calculator
- Enter the direct acquisition or manufacturing cost per unit.
- Enter the selling price charged to retail or wholesale buyers.
- Inspect the gross margin percentage and compare against industry benchmarks.
- Check the markup percentage to understand the cost-plus multiplier required.
Formula & Calculation Methodology
Margin is calculated relative to revenue (selling price), whereas markup is calculated relative to purchase cost.
Worked Example
Product bought at $60 wholesale and retailed at $100
Frequently Asked Questions
What is the key difference between margin and markup?↓
Margin expresses profit as a percentage of selling price, whereas markup expresses profit as a percentage of cost. A 50% markup yields a 33.3% profit margin.
Can profit margin exceed 100%?↓
No. Since margin is profit divided by revenue, and cost cannot be below zero, profit margin can never exceed 100%.
Can markup exceed 100%?↓
Yes. If an item costs $10 and is sold for $30, the profit is $20, representing a 200% markup on cost and a 66.7% profit margin.
What is considered a healthy gross margin in retail?↓
Retail gross margins generally range between 30% and 55%, depending on inventory turnover speed, perishability, and fulfillment overhead.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.