Last updated: July 2026
The Most Important Retail Metric
If you are selling products online or in a physical store, your Profit Margin is the ultimate indicator of your business health. Calculating it manually for hundreds of SKUs is tedious, but our calculator makes it instant.
Don't Confuse Margin with Markup
If you buy a product for $50 and sell it for $100, your Markup is 100%, but your Margin is only 50%. Confusing these two terms can cause you to accidentally price your products at a loss. Our tool displays both simultaneously to prevent this costly error.
Worked Example
Using the calculator's default numbers — a $100 cost and $150 selling price:
- Profit = $150 − $100 = $50
- Margin = $50 ÷ $150 × 100 = 33.3%
- Markup = $50 ÷ $100 × 100 = 50%
Same $50 profit, two very different-looking percentages — which is exactly why checking both numbers matters when you're setting prices.
Frequently Asked Questions
Profit Margin is your profit divided by your revenue. It tells you what percentage of your total sales is actually profit. For example, a 20% margin means you keep 20 cents for every dollar of sales.
No! This is a very common mistake. Margin is based on Revenue (Selling Price), while Markup is based on Cost. A 50% markup on a $100 item makes the price $150. The profit is $50, which is a 33.3% margin ($50 / $150).
It varies wildly by industry. Grocery stores operate on razor-thin margins (1-3%), while software companies often have margins exceeding 80%.
Subtract cost from revenue to get profit, then divide profit by revenue and multiply by 100. Our calculator does this instantly and also shows the equivalent markup for comparison.
Because they're easy to confuse and mixing them up can lead to underpricing. Seeing both numbers side by side for the same cost and revenue helps you catch pricing mistakes before they cost you money.
Most retail and e-commerce businesses plan around target margin, since it's calculated against the selling price and ties directly to what percentage of each sale is kept as profit. Markup is more common in wholesale and manufacturing contexts.