Profit margin calculator

Gross profit margin is the share of every sale you keep after paying for the product itself. Sell a candle for $20 that costs $8 to make and you keep $12 — a 60% margin. The formula is (price − cost) ÷ price, expressed as a percentage of the price, not of the cost.

Margin is the number that decides whether your business can afford to exist. Rent, software, marketing, and your own pay all come out of gross profit — a product with a thin margin has to sell in huge volume to cover them, while a fat margin buys you room to make mistakes.

The calculator has two modes. In “I know my price” mode, enter what one unit costs you and what you sell it for; you get your gross margin, profit per unit, and the equivalent markup instantly — no submit button, no account.

In “I want a target margin” mode you work backwards: enter your unit cost and the margin you want to keep, and the calculator solves the price you need to charge. This is the mode to use before you launch — decide the margin your business needs, then check whether the market accepts the price it implies.

The advanced toggle adds the two costs that quietly eat sticker margins: shipping you don’t pass on and the marketing cost of acquiring each order. A product with a healthy 54% gross margin can drop under 20% once a $2 shipping subsidy and $3 of ad spend come out of a $14 sale — that true margin is the number your bank account experiences.

Margin and markup use the same two inputs but answer different questions, and mixing them up is one of the most common pricing mistakes in retail. Margin measures profit as a share of the price; markup measures it as a share of the cost. Marking up an $8 product by 50% gives a $12 price — but only a 33.3% margin, not 50%.

The two convert with markup = margin ÷ (1 − margin). The gap grows fast: a 50% margin already requires a 100% markup, and a 75% margin needs a 300% markup. Use the table to translate the margin you want into the markup to apply at the shelf.

Pricing by applying a percentage on top of cost? Use the free markup calculator — the same engine, asked from the cost side.

Say you roast coffee. A 12-oz bag costs $6.50 in beans, label, and packaging, and sells for $14. Profit per unit is $7.50, gross margin is 53.6%, and the markup equivalent is 115.4% — a solid position for specialty food.

Now open the advanced toggle. Free shipping actually costs you $2.10 an order, and Instagram ads run about $3.00 per order won. True profit falls to $2.40 and true margin to 17.1% — still viable, but a very different business. That is the check worth running before you promise free shipping.

Compare your number against your industry before judging it. Grocery and convenience retail live on gross margins around 25–35%, apparel typically runs 40–60%, restaurants price food at 65–70% gross to survive on 5–10% net, and software or services can clear 80%. A good margin is one that covers your fixed costs at a sales volume you can realistically hit.

If the margin is too thin, you have three levers: raise the price, cut the unit cost, or change the offer so it deserves a higher price. Run the target-margin mode with the number you actually need — and check what your fixed costs demand of it with the break-even calculator.