# What is my profit margin?

Computes the profit margin (profit as a percent of the selling price) and the markup from any two of cost, selling price, profit and margin.

- Page: https://www.acalculator.org/finance/margin-calculator
- JSON spec: https://www.acalculator.org/finance/margin-calculator.json
- Version: eaa42620496d

## Default answer

Example with the default inputs (Selling price $120.00, Cost $90.00): Selling for $120.00 at a cost of $90.00 is a profit of $30.00: a 25% margin and a 33.33% markup.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| revenue | Selling price | The price you sell the item for (the revenue). |
| cost | Cost | What the item costs you to buy or make. |
| margin | Margin | The profit as a percent of the selling price: profit ÷ price × 100. |
| profit | Profit | The selling price minus the cost. Negative for a loss. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| revenue | Selling price | The price you sell the item for (the revenue). |
| cost | Cost | What the item costs you to buy or make. |
| margin | Profit margin | The profit as a percent of the selling price: profit ÷ price × 100. |
| profit | Profit | The selling price minus the cost. Negative for a loss. |
| markup | Markup | The profit as a percent of the cost: P ÷ C × 100. |

## Method

M = P ÷ R × 100, where P = R − C. C is the cost, R the selling price, P the profit and M the margin.

## Assumptions

- The cost and the selling price are more than 0.
- The margin is a percent of the revenue (the selling price); the markup is a percent of the cost.
- A loss gives a negative profit and a negative margin. Margins run from −1,000% (a cost 11 times the revenue) to just under 100%; numbers outside that range, or that need a cost or revenue of 0 or less, have no answer.

## Worked examples

1. cost = $70.00, revenue = $100.00 gives profit = $30.00, margin = 30%, markup = 42.857143%. Source: hand calculation in content.mdx: 100 − 70 = 30; 30 ÷ 100 × 100 = 30%; 30 ÷ 70 × 100 = 42.86%.
2. cost = $60.00, margin = 25% gives revenue = $80.00, profit = $20.00, markup = 33.333333%. Source: hand calculation in content.mdx: 60 ÷ (1 − 0.25) = 80; 80 − 60 = 20; 20 ÷ 60 × 100 = 33.33%.
3. revenue = $250.00, margin = 40% gives profit = $100.00, cost = $150.00, markup = 66.666667%. Source: hand calculation in content.mdx: 250 × 0.40 = 100; 250 − 100 = 150; 100 ÷ 150 × 100 = 66.67%.
4. cost = $120.00, revenue = $100.00 gives profit = -$20.00, margin = -20%, markup = -16.666667%. Source: hand calculation in content.mdx: a loss: 100 − 120 = −20; −20 ÷ 100 × 100 = −20%.

## 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. An item bought for $70 and sold for $100 makes $30 profit, a 30 ÷ 100 × 100 = 30% margin.

### What is the difference between margin and markup?

Both use the same profit. Margin divides it by the selling price; markup divides it by the cost. The $30 profit on a $70 item sold for $100 is a 30% margin but a 30 ÷ 70 × 100 = 42.86% markup. With a profit, the markup is always larger than the margin.

### What price gives me the margin I want?

Divide the cost by (1 − margin ÷ 100). For a 25% margin on a $60 cost, the price is 60 ÷ 0.75 = $80. Adding 25% to the cost ($75) gives only a 20% margin, a common mistake.

### Can a margin be more than 100%?

No. A margin is the share of the selling price that is profit, so it stays below 100% while the cost is above $0. A markup has no upper limit.

### What does a negative margin mean?

You sold for less than the cost, so the profit is a loss. Selling a $120 item for $100 loses $20, a −20% margin.

### Is this the same as a gross margin?

The maths is the same. Gross margin uses a business's whole revenue and its cost of goods sold, so it is used for a company or product line rather than one item. See the gross margin calculator.

## Sources

- U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (gross profit is revenue minus cost of sales; margins are shown as a percent of each dollar of sales). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements
- Hand derivation of the rearrangements from M = (R − C) ÷ R × 100 (shown in full below).