Profit Margin Calculator
Profit margin tells you how much of every rupee of sales you keep as profit. This calculator finds the margin from your cost and selling price, or works the other way: the price you must charge, or the cost you must stay under, to hit a target margin.
Last reviewed:
- Selling price
- ₹1,000.00
- Cost price
- ₹800.00
- Profit
- ₹200.00
- Profit margin (on selling price)
- 20%
- Markup (on cost)
- 25%
- Margin is profit as a share of the selling price. Markup is profit as a share of cost, so it is always the larger figure.
- Taxes, discounts and overheads are not deducted. Enter prices after any such adjustments.
It also shows markup alongside margin, since mixing up the two is one of the most common pricing mistakes.
How to use this calculator
- Choose what you want to find: margin, selling price or cost.
- Enter the two values asked for, in rupees or percent.
- Read the profit, margin and markup.
- Try different prices to see how the margin moves.
Formula and variables
Profit = Selling price − Cost Margin % = Profit ÷ Selling price × 100 Markup % = Profit ÷ Cost × 100 Price for a target margin = Cost ÷ (1 − Margin ÷ 100)
- Margin - profit as a percentage of the selling price. It can never reach 100%.
- Markup - profit as a percentage of cost. It can be above 100%.
Worked example
A shop buys an item for ₹800 and sells it for ₹1,000.
| Cost price | ₹800 |
|---|---|
| Selling price | ₹1,000 |
| Profit | ₹200 |
| Profit margin | 20% |
| Markup | 25% |
- Profit = 1,000 − 800 = 200.
- Margin = 200 ÷ 1,000 = 20%.
- Markup = 200 ÷ 800 = 25%.
What changes the result
- Cost definition. Gross margin usually uses direct costs only. Net margin also removes overheads, interest and tax.
- Discounts. A discount lowers the selling price, which cuts the margin more than most people expect.
- GST. Use prices excluding GST, since GST collected is not your income.
- Volume. A thin margin can still earn well at high volumes.
Benefits and practical uses
- Price products with confidence.
- Avoid mixing up margin and markup.
- Find the maximum cost that still protects your margin.
Assumptions and limitations
- Margin here is gross margin on one item or order. Overheads and taxes are not deducted.
- Prices are entered excluding GST.
- A target margin must be below 100%.
Frequently asked questions
How do I calculate profit margin?
Subtract cost from the selling price, divide by the selling price and multiply by 100.
What is the difference between margin and markup?
Margin is profit divided by selling price, while markup is profit divided by cost. A 25% markup equals a 20% margin.
How do I set a price for a 30% margin?
Divide the cost by 0.70. A ₹700 cost needs a ₹1,000 price.
What is a good profit margin?
It varies widely by industry. Compare with similar businesses rather than a fixed number.
Can the margin be negative?
Yes. A negative margin means you sell below cost and make a loss.
References
Page last reviewed on . This calculator gives estimates for planning only; it is not financial advice and not an offer from any lender.