Profit margin formula
Profit margin is the share of the selling price you keep as profit: subtract the cost from the price, then divide by the price.[1]
Multiply by 100 to show it as a percentage. Margin is always measured against revenue, so it can never reach 100% while the item costs anything. Markup uses the same profit but divides by the cost instead, which is why a 40% margin and a 66.7% markup describe the same sale. The margin vs markup guide explains when each one is used, and the margin calculator solves for a price, a cost or a margin when you know any two of them.
Gross, operating and net profit margin
A single sale has a gross margin; a business has three margins, one for each level of its income statement.
| Margin | Profit used | What it tells you |
|---|---|---|
| Gross margin | Revenue − cost of goods sold | How much each sale leaves after the product itself |
| Operating margin | Gross profit − operating expenses | Whether the core business covers rent, wages and marketing |
| Net profit margin | Profit after interest and income tax | What the owners keep from each dollar of revenue |
Cost of goods sold covers what you paid for the products you sold, plus freight-in and the direct costs of making them; it does not include general overhead.[2] Fill in the optional other costs field above to see a per-sale net margin after marketplace fees and shipping, or open the step-by-step guide to calculating profit margin for a full worked income statement.
Margin to markup conversion table
To reach a target margin, multiply your cost by the price multiplier in the table: a 40% margin needs a 66.7% markup, so an item that costs $10 must sell for $16.67.
| Margin | Markup | Price multiplier | Price for $10 cost |
|---|---|---|---|
| 10% | 11.1% | 1.111× | $11.11 |
| 15% | 17.6% | 1.176× | $11.76 |
| 20% | 25.0% | 1.250× | $12.50 |
| 25% | 33.3% | 1.333× | $13.33 |
| 30% | 42.9% | 1.429× | $14.29 |
| 33.3% | 50.0% | 1.500× | $15.00 |
| 40% | 66.7% | 1.667× | $16.67 |
| 50% | 100.0% | 2.000× | $20.00 |
| 60% | 150.0% | 2.500× | $25.00 |
| 75% | 300.0% | 4.000× | $40.00 |
The conversion formulas are markup = margin ÷ (1 − margin) and margin = markup ÷ (1 + markup). The markup calculator does the conversion for any cost, and the selling price calculator also adds marketplace and card fees, which come out of the price before you see any profit.
What is a good profit margin?
A good profit margin depends on the industry: in U.S. Census Bureau data for 2022, gross margin ranged from 24.3% to 53.6% of sales across these kinds of retail business.[3]
| Kind of business | Gross margin |
|---|---|
| Total retail | 31.1% |
| Furniture and home furnishings stores | 51.0% |
| Electronics and appliance stores | 29.4% |
| Grocery stores | 28.0% |
| Clothing stores | 50.6% |
| Shoe stores | 50.9% |
| Sporting goods, hobby and musical instrument stores | 44.6% |
| Warehouse clubs and supercenters | 24.3% |
| Miscellaneous store retailers | 53.6% |
| Electronic shopping and mail-order houses | 39.6% |
Net margins are much thinner than gross margins because rent, wages, marketing and taxes come out of gross profit. In Aswath Damodaran's January 2026 dataset of U.S. public companies, the net margin for the whole market was 9.7%.[4] Compare your margin with businesses like yours, not with a single rule of thumb; the profit margin guide has the full benchmark table by industry.
Calculators on this site
Margin and markup
- Margin calculatorAny two of cost, price, margin, markup or profit
- Markup calculatorPrice from cost and markup, or markup from cost and price
- Gross margin calculatorRevenue and COGS for up to three product lines
- Net profit margin calculatorGross, operating, EBITDA and net margin from an income statement
- Contribution margin calculatorCM per unit, CM ratio, break-even and operating leverage
- Margin vs markupThe difference, the conversion formulas and a chart
- Margin formula in ExcelCopy-paste formulas for margin, markup, target price and blended margin
- How to calculate profit marginGross, operating and net margin step by step, with industry benchmarks
Pricing, break-even and profit
- Break-even calculatorUnits and sales to cover fixed costs, with a chart
- Profit calculatorRevenue, goods, fees, shipping and overhead to net profit
- Selling price calculatorThe price that hits a target margin after fees
- Price increase calculatorNew price, % increase and the sales you can afford to lose
- Discount calculatorSale price, stacked discounts and the margin after a discount
- Landed cost calculatorFreight, duty, MPF and fees per unit for an import
- Food cost calculatorFood cost %, prime cost and the menu price for a target
- Freelance hourly rate calculatorThe rate that covers income, self-employment tax and costs
- Vending machine profit calculatorMonthly profit, commission, card fees and payback
Marketplace seller fees
- Marketplace fee calculatorOne sale compared on eight platforms after fees and postage
- eBay fee calculatorFinal value fee on the total incl. tax, ads, profit
- eBay fees 2026Every category rate, Store rates and fee history
- Etsy fee calculatorListing, 6.5% transaction, processing by country, Offsite Ads
- Amazon FBA calculatorReferral, fulfillment + 3.5% surcharge, storage, ROI
- Amazon fee calculatorReferral fees by category for orders you ship
- Depop fee calculatorNo selling fee in the US, UK and Australia: processing and boost
- Mercari fee calculator10% of item and buyer-paid shipping, Instant Pay
- Poshmark fee calculator$2.95 under $15, 20% above; Canada with GST/HST
- Whatnot fee calculatorTiered commission by category plus processing
- TikTok Shop fee calculator6% referral on item + shipping, creator commission, refunds
- Grailed fee calculator9% or 6% commission plus Stripe processing
- OfferUp feesNo selling fee on local sales; listings and promotions
- Shopify fee calculatorPlan price plus card rates, compared across plans
Payment and card processing fees
- PayPal fee calculator3.49% + $0.49 checkout, 2.99% goods and services, reverse mode
- Venmo fee calculatorBusiness 1.9% + $0.10, personal 2.99%, instant transfer
- Stripe fee calculator2.9% + 30¢ with international, ACH and payout add-ons
- Square fee calculatorFree, Plus and Premium rates in person, online and invoices
- Stripe vs Square feesOnline and in-person fees side by side, with PayPal
- Cash App fee calculator2.6% + $0.15 business payments and instant deposit
- Credit card processing fee calculatorFlat rate vs interchange-plus, monthly cost
- Interchange plus pricing2026 interchange rates, the debit cap and how to read a quote
Frequently asked questions
How do you calculate profit margin?
Subtract the cost from the selling price to get profit, divide the profit by the selling price, and multiply by 100. For a $50 item that costs $30: (50 − 30) ÷ 50 = 0.40, a 40% margin.
What is the difference between margin and markup?
Both start from the same profit. Margin divides it by the selling price; markup divides it by the cost. A $10 item sold for $15 has a 33.3% margin and a 50% markup.
Can profit margin be more than 100%?
No. Profit can never exceed the selling price unless the cost is negative, so margin tops out just below 100%. Markup has no ceiling: selling a $10 item for $40 is a 300% markup.
Is profit margin the same as gross margin?
On a single product, "profit margin" usually means gross margin: price minus the cost of the item. For a whole business, people also use it for net profit margin, which subtracts every expense, interest and tax.
Should fees and shipping go into the cost?
Put them in the other costs field. The result then shows both the gross margin on the item and the net margin after the costs of selling it, which is the number that matters to a marketplace seller.
Sources
- Principles of Marketing, 18.3 Retailing Strategy Decisions (markup and gross margin)
- Publication 334, Tax Guide for Small Business (chapters 6 and 7: cost of goods sold and gross profit)
- Annual Retail Trade Survey: 2022 (benchmarked), gross margin as a percentage of sales by kind of business
- Operating and Net Margins by Industry (US), data as of January 2026