What is a profit margin calculator?
A profit margin calculator works out how much of every sale you keep as profit. Enter what an item costs you and what you sell it for, and this free online tool shows the profit in money, the profit margin percentage and the markup percentage side by side. Switch the mode to enter a target margin or target markup and it gives you the selling price you need. It works as a profit margin calculator in rupees for Indian shops and sellers, and in any other currency for Amazon, Etsy, Shopify or dropshipping stores.
What is profit margin?
Profit margin is profit expressed as a percentage of the selling price (revenue). If you sell something for ₹1,000 and make ₹400 profit, your margin is 40%: forty paise of every rupee of sales is profit. Margin answers the question "what share of my sales do I keep?", which is why lenders, investors and accountants use it to compare businesses of different sizes.
What is profit margin in business?
Businesses track three margins:
- Gross profit margin = (Revenue − Cost of goods sold) ÷ Revenue. This is what this gross margin calculator shows for a single product.
- Operating margin = Operating profit ÷ Revenue, after rent, salaries and other running costs.
- Net profit margin = Net profit ÷ Revenue, after interest and tax. This is the "bottom line".
Profit margin calculator formula: what is profit margin formula?
Profit = Selling price − Cost price
Profit margin % = Profit ÷ Selling price × 100
Markup % = Profit ÷ Cost price × 100
- Selling price = revenue per unit, excluding GST, VAT or sales tax
- Cost price = what the unit costs you (purchase price, or materials plus labour)
To find a price from a target margin or markup:
Price for a margin = Cost ÷ (1 − Margin % ÷ 100)
Price for a markup = Cost × (1 + Markup % ÷ 100)
In Hindi, the profit margin ka formula is: munafa ÷ bechne ki keemat × 100. Profit percentage in Indian school maths (munafa pratishat) is usually calculated on cost, which is the same as markup.
Profit margin vs markup
This is the most common pricing mistake. Margin and markup use the same profit but divide it by different numbers: margin divides by the selling price, markup divides by the cost. So markup is always the bigger number. A 50% markup does not give a 50% margin.
| Markup on cost | Profit margin on price |
|---|---|
| 25% | 20.0% |
| 33.3% | 25.0% |
| 50% | 33.3% |
| 66.7% | 40.0% |
| 100% | 50.0% |
| 200% | 66.7% |
Convert between them with Margin = Markup ÷ (1 + Markup) and Markup = Margin ÷ (1 − Margin), using decimals. This page doubles as a profit margin vs markup calculator: both figures appear in every result.
How to calculate profit margin with example
How to calculate profit margin for a product
You buy a kurta for ₹600 and sell it for ₹1,000. Profit = 1,000 − 600 = ₹400. Margin = 400 ÷ 1,000 × 100 = 40%. Markup = 400 ÷ 600 × 100 = 66.67%. These are the calculator's default values.
Finding the price for a target margin
You want a 40% margin on an item that costs ₹600. Price = 600 ÷ (1 − 0.40) = ₹1,000. A common error is 600 × 1.40 = ₹840, which is a 40% markup and only a 28.6% margin.
Profit margin calculator for service business owners
For services, cost is your direct cost per job: hours × hourly labour cost plus materials. If a website project uses 40 hours at ₹500 an hour plus ₹5,000 of tools (₹25,000 in total) and you bill ₹40,000, the margin is 15,000 ÷ 40,000 = 37.5%.
Profit margin calculator with GST, VAT or tax
Always calculate margin on the price excluding GST or VAT. The tax you collect belongs to the government, not to your business. If your shelf price in India is ₹1,180 including 18% GST, your revenue is 1,180 ÷ 1.18 = ₹1,000. Enter ₹1,000 as the selling price. Use the GST calculator to remove tax from an inclusive price, or the sales tax calculator for US prices. Registered sellers also claim input tax credit on purchases, so use the cost excluding GST too.
Profit margin calculator with discount
Discounts come straight out of margin. On the ₹600 / ₹1,000 kurta, a 10% discount cuts the price to ₹900 and the margin from 40% to 33.3%, so profit falls by a quarter even though the price fell only 10%. Work out the discounted price with the discount calculator, then enter it here to see the real margin.
What profit margin is good?
It depends on the industry. As a rough guide for gross margins:
- Grocery and kirana stores: low, often 5–15%, made up by volume.
- Restaurants and food: gross margins of 60–70% on dishes, but net margins of 3–10% after rent and staff.
- Clothing retail: gross margins of 40–60% are common.
- Software and digital products: gross margins of 70–90%.
- Marketplaces and dropshipping: whether you sell on Amazon India, run an Etsy shop or do dropshipping, subtract platform commission, shipping and returns from the price before you enter it in the profit margin calculator.
A net profit margin around 10% is usually seen as healthy for a small business, 20% as strong and below 5% as thin.
How to calculate profit margin in Excel or Power BI
With the selling price in A2 and the cost in B2: margin =(A2-B2)/A2, markup =(A2-B2)/B2, and the price for a target margin in C2 =B2/(1-C2). Format the result cells as percentages. In Power BI, the profit margin formula in DAX is DIVIDE(SUM(Sales[Revenue]) - SUM(Sales[Cost]), SUM(Sales[Revenue])). For return on money invested over time, try the ROI calculator.
A profit margin markup calculator for every business
This profit margin calculator online is free, needs no app and works as a template you can reuse for every product. What is my profit margin? Enter two numbers and it tells you. How it fits common uses:
- Profit margin calculator for product sellers: a cost profit margin calculator for every SKU in your catalogue.
- Profit margin calculator for business owners and a job profit margin calculator for contractors quoting a job.
- Profit margin calculator for food: for restaurants, cafés, biryani and bakery businesses, enter the food cost per plate as cost.
- Profit margin calculator with VAT or with tax: remove VAT or sales tax first, then enter the net price.
- Profit percentage calculator India: a profit percentage calculator in rupees for kirana stores, petrol pumps, cement dealers and clothing shops, and a profit percentage calculator online for students.
- Margin profit loss calculator: if the price is below cost, the result shows the loss per unit.
- Free gross profit margin calculator: the result is the gross margin, so this is also a gross margin calculator online and a gross margin markup calculator.
Profit margin formula with sales and cost
Written with total figures, the profit margin formula with sales is (Net sales − Cost of goods sold) ÷ Net sales × 100, and the profit margin formula with cost price for a single item is (Selling price − Cost price) ÷ Selling price × 100. Both give the same answer per unit. In accounting reports the profit margin formula for business uses net sales (after returns and discounts), which is the profit margin formula net sales figure your P&L shows. To calculate profit margin percentage for a whole year, use annual totals.
Gross margin formula vs markup, in one line
Gross margin = profit ÷ price; markup = profit ÷ cost. That is the whole difference in the profit margin formula vs markup debate, and this profit vs margin calculator shows both so you never mix them up.
Profit margin in real businesses
What is profit margin in a petrol pump? Dealers earn a fixed commission per litre, so their margin is only about 2–4% of the pump price. What is profit margin in a cement business? Dealers typically work on ₹10–₹25 per bag, a margin of a few percent. What is profit margin in a kirana store? Usually 8–15% across products. Profit margin in a clothing business is much higher, often 40–60% gross, and profit margin in a biryani business or other restaurant is 60–70% gross on food cost. As a profit margin calculator free for any of these, enter your cost and price per unit.
What is profit margin scheme in UAE VAT? It is a VAT rule for second-hand goods, art and antiques where VAT is charged only on the seller's margin (price minus purchase cost) rather than on the full selling price.
Profit margin calculator percentage for real estate and trading
A profit margin calculator real estate investors can use works the same way: enter total cost (purchase, stamp duty, renovation) as cost and the sale price as price. The profit margin formula real estate developers quote is profit ÷ sales revenue. For trading and forex, margin means something different (the deposit a broker requires), so use the ROI calculator instead.
How to calculate profit margin: calculator steps
How to calculate profit margin with this calculator, and answer "what is my profit margin?":
- Choose "Cost and selling price".
- Enter what one unit costs you, including buying, making and shipping it.
- Enter the selling price before tax.
- Read the margin %: profit ÷ selling price × 100.
With a cost of 600 and a price of 1,000, the profit margin calculator shows a profit of 400, a 40% margin and a 66.67% markup.
Profit margin formula with example for Maths Lit and A level Business
School syllabuses use the same formulas as this calculator. In South African Maths Lit, the profit margin formula is usually written as profit ÷ selling price × 100, while "percentage profit" or markup uses cost. In A level Business, the gross profit margin formula is gross profit ÷ revenue × 100 and the net profit margin formula is net profit ÷ revenue × 100.
Worked example: a firm has revenue of £200,000, cost of sales of £120,000 and other expenses of £50,000. Gross profit = £80,000, so the gross margin is 40%. Net profit = £30,000, so the net margin is 15%.
Profit margin calculator in South Africa, NZ and the UK (GBP)
The profit margin calculator works in rand, NZ dollars, GBP or any currency, because margins are percentages. Always enter prices excluding VAT or GST: 15% VAT in South Africa, 15% GST in New Zealand and 20% standard VAT in the UK. For example, a product sold for R1,150 including 15% VAT is really a R1,000 sale; if it cost R700, the margin is 30%, not 39%.
Operating margin calculation in healthcare
Hospitals and clinics track operating margin: operating income ÷ total operating revenue × 100, where operating income is revenue from patient care and related services minus operating expenses such as salaries, supplies and rent. A hospital with ₹50 crore of operating revenue and ₹47 crore of expenses has a 6% operating margin. Many hospitals run on low single-digit operating margins, so small cost changes matter.
Profit margin calculator for forex and crypto trading
In forex and crypto trading, "margin" usually means the deposit a broker needs to open a leveraged position, not profit margin. To find your profit margin on a closed trade, use the profit margin calculator with the buy value as the cost and the sale value as the selling price, after fees. Buying crypto for $1,000 and selling for $1,150 with $10 of fees gives $140 profit, a 12.2% margin on the sale value or a 14% return on cost.
Frequently asked questions
How do I calculate profit margin?
Subtract cost from selling price to get profit, divide the profit by the selling price and multiply by 100. For example, (₹1,000 − ₹600) ÷ ₹1,000 × 100 = 40% margin.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. On a ₹600 item sold for ₹1,000, the margin is 40% and the markup is 66.67%.
What price gives a 30% profit margin?
Divide the cost by 0.70. An item costing ₹700 must sell for ₹1,000 to give a 30% margin.
Should GST or VAT be included when calculating margin?
No. Calculate margin on the price excluding GST, VAT or sales tax, because that tax is passed on to the government.
Can profit margin be more than 100%?
No. Margin is profit divided by price, and profit can never be larger than the price. Markup, however, can be above 100%.
What is a good profit margin?
It varies by industry. Around 10% net margin is healthy for many small businesses, 20% is strong, and under 5% is thin. Gross margins in retail are often 40–60%.
What is profit margin percentage and how to calculate it?
Profit margin percentage is profit divided by selling price, times 100. This is also how to calculate profit margin on sales for a whole business: (net sales − cost of goods sold) ÷ net sales × 100.
How to calculate profit margin in Flipkart or Amazon?
Take the selling price, subtract the marketplace commission, fixed fee, shipping and GST payable, then subtract your product cost. Divide what is left by the selling price excluding GST. Enter the net payout as the selling price here to see your real margin.
What is the profit margin formula with an example?
Profit margin = (selling price − cost) ÷ selling price × 100. Cost 600 and price 1,000 give 400 profit and a 40% margin.
What is operating margin in healthcare?
Operating income (operating revenue minus operating expenses) divided by operating revenue, as a percentage. It shows how much a hospital keeps from patient care and related activities.
Last updated 2026-09-18