Profit Margin Calculator
Calculate gross profit margin, net profit margin, and markup percentage. Find selling price from cost and desired margin.
About this calculator
This calculator works out gross profit, profit margin and markup for any product in rupees, and works backwards to give a selling price for the margin you want. Two tabs handle the two jobs: margin from cost and price, and price from cost and margin.
Knowing your margin is how you decide whether a price is sustainable. A product with a 10% margin has no room for discounts, returns or a bad month, while a 50% margin can absorb them. Check each product, not just the business total.
How to use it
- Choose Margin from cost & price.
- Enter the Cost Price and the Selling Price to see profit, margin and markup.
- Or choose Price from cost & margin and enter the Cost Price and your Desired Margin.
Calculation
Markup % = (Price − Cost) ÷ Cost × 100 and Margin % = (Price − Cost) ÷ Price × 100. Convert: Margin = Markup ÷ (100 + Markup) × 100 and Markup = Margin ÷ (100 − Margin) × 100. To price from cost and margin: Price = Cost ÷ (1 − Margin). To price from cost and markup: Price = Cost × (1 + Markup).
Worked example
Cost ₹60, selling price ₹100
| Profit | ₹40 |
| Gross margin | 40.0% |
| Markup on cost | 66.7% |
If you wanted a 25% margin on the same ₹60 cost, the price would be ₹80, since 60 ÷ 0.75 = 80.
Tips and common mistakes
- Markup is on cost, margin is on price. A 50% markup is a 33.3% margin, never 50%.
- If you want a 40% margin, a 40% markup gives you only 28.6%. Use cost ÷ (1 − 0.40) instead.
- Margin is the number that matters for profit. It is the share of every rupee of sales you keep before overheads.
- Do not forget GST. Work out margin on the price excluding tax.
- Discounts hit margin hard. A 10% discount on a 30% margin removes a third of the profit.
Frequently asked questions
How is profit margin calculated?
(Selling price − Cost) ÷ Selling price × 100.
What is the difference between margin and markup?
Markup is measured on cost and margin on price. A 40% margin equals a 66.7% markup.
How do I price for a given margin?
Cost ÷ (1 − margin). For a 20% margin on ₹80 cost, the price is ₹100.
Is profit margin before or after tax?
Gross margin is before tax and overheads. Net margin comes after them.
Does GST affect margin?
Calculate margin on the price without GST, because GST goes to the government.
How can I raise my margin?
Raise prices, cut costs, change the product mix or reduce discounts.