# Profit margin calculator

> Profit margin is profit divided by the selling price, while markup is profit divided by cost. An item that costs $24 and sells for $40 earns $16, a 40% margin and a 66.67% markup. To price for a target margin, divide the cost by (1 − margin): $24 ÷ 0.60 = $40.

Source: https://www.calterix.com/en-us/calculator/profit-margin/ · Updated 11/06/2026 · en-US

## Profit margin vs markup

Margin and markup start from the same profit but divide by different numbers. Margin tells you how much of the selling price is profit. Markup tells you how much was added on top of the cost.

```
Profit = Price − Fees − Cost
Margin = Profit ÷ Price × 100
Markup = Profit ÷ Cost × 100
Price = Cost ÷ (1 − margin − fees)
```
Percents as decimals (40% = 0.40). Fees are a percent of the price.

Example: cost $24, price $40. Profit is $16. Margin: 16 ÷ 40 = 40%. Markup: 16 ÷ 24 = 66.67%. Margin never goes above 100%, but markup can.

## Margin to markup chart

| Margin | Equivalent markup | Price for a $100 cost |
| --- | --- | --- |
| 10% | 11.11% | $111.11 |
| 20% | 25% | $125.00 |
| 25% | 33.33% | $133.33 |
| 30% | 42.86% | $142.86 |
| 40% | 66.67% | $166.67 |
| 50% | 100% | $200.00 |

No fees. Markup = margin ÷ (1 − margin).

A 50% markup does not give a 50% margin: it gives 33.33%. That is the most common pricing mistake, and the Markup tab shows the true margin for each percent. In retail, doubling the cost (a 100% markup) is a 50% margin, a rule of thumb sometimes called keystone pricing.

## Selling fees and other costs

Card processing, marketplace commissions, and shipping subsidies often scale with the price. Add them up in the fees field, and the math keeps the margin you want after those costs.

Example: cost $50, target margin 25%, fees 10%. Price = 50 ÷ (1 − 0.25 − 0.10) = $76.92. Of that, $7.69 goes to fees and $19.23 is profit. Sales tax is not part of this math, because the customer pays it on top of the price and you pass it along.

- Fixed costs like rent and salaries are not in the cost of one item. Spread them across the items you expect to sell if you want to include them.
- For discounts and price increases in percent, use the [percentage calculator](https://www.calterix.com/en-us/calculator/percentage/).
- To work out sales tax on a price, use the [sales tax calculator](https://www.calterix.com/en-us/calculator/sales-tax/).

## Frequently asked questions

### How do I calculate profit margin?

Divide profit by the selling price and multiply by 100. With a $24 cost and a $40 price, profit is $16 and the margin is 40%.

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

Margin is figured on the selling price and markup on the cost. With $16 of profit on a $24 cost, the margin is 40% and the markup is 66.67%.

### How do I find the selling price for a target margin?

Divide the cost by (1 − margin). For a $24 cost and a 40% margin, the price is $40. With 10% fees, divide by (1 − 0.40 − 0.10) and the price rises to $48.

### How do I convert markup to margin?

Margin = markup ÷ (1 + markup). A 100% markup equals a 50% margin. The Margin and markup tab does the switch for you.

### What is a good profit margin?

It depends on the industry, the sales volume, and fixed costs. The right margin covers your overhead and leaves the profit your business needs.