Margin Calculator
Gross profit margin is the percentage of revenue that remains after subtracting the direct cost of a product or service. It is one of the most fundamental metrics in business finance, used to assess how efficiently a business turns sales into profit. A higher margin means more of each sale contributes to overheads and net income. Tracking margin consistently is essential for pricing decisions, product mix analysis, and evaluating whether a business is becoming more or less profitable over time.
To use this calculator, enter your revenue (the selling price) and your cost (what it costs to produce or deliver). The calculator shows the profit amount and the margin percentage using the standard formula: margin = (revenue minus cost) divided by revenue, then multiplied by 100. This formula makes margin a percentage of revenue — which is why margin is always a smaller number than markup for the same transaction, since markup uses cost as its base. A product costing £60 and selling for £100 has a 40% margin but a 66.7% markup.
Margin analysis is useful across many practical contexts: evaluating the profitability of individual products, comparing performance across a product range, setting minimum acceptable prices, or modelling the impact of cost increases or discounts. If a supplier raises prices by 10%, you can use this calculator to instantly see how it affects your margin — and what selling price adjustment you need to restore it. For converting between margin and markup, use the Margin to Markup Converter.
Formula
Profit = Revenue − Cost Margin % = (Profit ÷ Revenue) × 100
Profit margin is the percentage of revenue that remains as profit after costs. It is calculated by dividing profit by revenue, not by cost. This is the key difference between margin and markup.
Worked Examples
Frequently Asked Questions
What is the difference between margin and markup?▾
Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. A 50% markup on a £100 cost gives a £150 selling price, but the margin is only 33.3% — not 50%. Confusing the two leads to systematic pricing errors. Use the Margin to Markup Converter to translate between them accurately.
What is a good profit margin?▾
This varies widely by industry. Software and SaaS businesses typically achieve gross margins of 70–90%. Retail margins are often 20–50%. Restaurants typically see 60–70% on food costs but lower when labour is included. Manufacturing businesses may see 25–40%. Always compare your margin against industry-specific benchmarks rather than a universal target.
Can margin be negative?▾
Yes. A negative margin means you are selling below cost — your revenue does not cover the direct cost of the product or service. This indicates a loss on each sale. While some businesses sustain negative margins temporarily (e.g. during a promotion or market entry phase), a persistently negative margin is unsustainable.
How do I convert margin to markup (and vice versa)?▾
Margin to markup: Markup = Margin ÷ (1 − Margin). For example, a 25% margin equals a 33.3% markup. Markup to margin: Margin = Markup ÷ (1 + Markup). A 50% markup equals a 33.3% margin. They are always different numbers for the same transaction. The Margin to Markup Converter handles this automatically.
What margin do I need to cover a discount?▾
Your maximum safe discount is roughly equal to your margin percentage — beyond that, you are selling at a loss. But maintaining the same total profit after a discount requires a disproportionate increase in volume. A 20% discount on a product with a 40% margin requires roughly 100% more unit sales just to break even on total profit. See the Discount Impact on Margin guide for a full analysis.
Related Calculators
Learn More
All calculations are for informational purposes only. They should not replace professional financial, tax, or legal advice. Always consult a qualified professional for decisions affecting your finances or business.