Profit Margin Calculator

Calculate gross profit margin, markup percentage, and selling price from cost and margin inputs.

By Konstantin Iakovlev · Updated September 2026 · Source: SBA — Business Guide

Calculation Mode
$
%

Selling Price

$100.00

Profit

$50.00

Gross Margin

50.0%

Margin Breakdown

Selling Price$100.00
Cost$50.00
Profit per Unit$50.00
Gross Margin %50.00%
Markup %100.00%

Use the Profit Margin Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Pricing a product well means knowing three numbers at once: your gross profit margin, your markup percentage, and the selling price that delivers the profit you are after given a known cost. These figures sit at the center of any plan for sustainable growth.

The math rests on a few standard formulas. Gross Profit Margin equals ((Selling Price - Cost) / Selling Price) * 100, and Markup Percentage equals ((Selling Price - Cost) / Cost) * 100. To work backward from a target margin to a price, divide cost by one minus your desired gross profit margin expressed as a decimal: Cost / (1 - Desired Gross Profit Margin as a decimal).

Margin and markup describe the same spread between cost and price, but they are not interchangeable, and treating them as if they were throws off the entire plan. A second trap is pricing aggressively to win on price while quietly failing to cover overhead and land a healthy net margin. Note too that everything here addresses gross profit alone, so your operating expenses beyond the cost of goods sold still need to be accounted for separately.

Example: Launching a New Smart Home Device

  1. 1 A hardware startup is launching an AI-powered smart home hub. The manufacturing cost per unit, including all components and assembly, is $125, and the target gross profit margin is 45% to leave room for marketing and R&D.
  2. 2 In Cost + Margin% mode, with a Cost of $125 and a Gross Margin of 45%, the Selling Price is $125 / (1 - 0.45) = $125 / 0.55 = $227.27. The Gross Profit is $227.27 - $125 = $102.27.
  3. 3 The recommended selling price for the smart home hub is $227.27. This price yields a gross profit of $102.27 per unit, achieving the target 45% gross profit margin.
  4. 4 The same spread expressed as a markup on cost is $102.27 / $125 = 81.82%, which the calculator shows alongside the margin. Operating expenses beyond the unit cost still have to be paid out of that $102.27.

Source: SBA — Business Guide · Last updated: September 2026

Frequently Asked Questions

What is a good profit margin for a small business?
Average net profit margins vary by industry: restaurants 3-9%, retail 2-5%, professional services 15-25%, software/SaaS 20-40%. A net margin above 10% is generally considered healthy for most industries.
What is the difference between gross and net profit margin?
Gross margin = (Revenue - Cost of Goods Sold) / Revenue. Net margin = (Revenue - All Expenses) / Revenue. Gross margin shows production efficiency; net margin shows overall profitability after all costs including overhead, taxes, and interest.
How do I calculate profit margin from cost and selling price?
Profit Margin = (Selling Price - Cost) / Selling Price x 100. If you buy a product for $60 and sell for $100, your margin is ($100-$60)/$100 = 40%. Note that margin is different from markup (which uses cost as the denominator).