Margin Calculator

Cost Price ($):

Selling Price ($):

How to Use the Margin Calculator

A Margin Calculator is a business tool that helps you determine the profit margin and markup percentage for a product based on its cost price and selling price.

Profit margins are vital in business because they show how much money you keep after covering your costs, while markup helps you set competitive selling prices that ensure profitability.

Why Use a Margin Calculator?

Running a business isn’t just about selling—it’s about selling smart. Many entrepreneurs struggle with setting the right prices. The price is too low, and you lose money. The price is too high, and you may lose customers. This is where the Margin Calculator becomes invaluable: it helps you quickly measure profitability, so you can make informed decisions.

Steps to Use the Calculator

Enter the Cost Price: This is how much it costs you to produce or purchase the product.
Example: $50.
Enter the Selling Price: This is the amount you plan to sell the product for.
Example: $75.
Click "Calculate Margin": The calculator instantly provides you with:
- Profit (how much money you make per unit).
- Margin (%) (profit compared to selling price).
- Markup (%) (profit compared to the cost price).

Example

Let’s say you buy a product for $50 and sell it for $75.

Profit = $75 – $50 = $25
Margin = (25 ÷ 75) × 100 = 33.33%
Markup = (25 ÷ 50) × 100 = 50%

This means for every $75 you earn in sales, $25 is pure profit. You’re operating on a 33% profit margin and applying a 50% markup.

Business Applications

Retailers use it to ensure they’re pricing competitively.
Wholesalers use it to check that bulk deals are still profitable.
Freelancers & service providers can calculate the margin on their billable hours or projects.
Startups can use it to model different pricing strategies before launching.

The calculator ensures you’re never guessing about profitability—it puts the numbers right in front of you.

FAQ: Margin Calculator

Q1: What’s the difference between margin and markup?
A: Margin is profit expressed as a percentage of the selling price, while markup is profit expressed as a percentage of the cost price. Both are useful, but used in different contexts.

Q2: Why does margin matter more than markup in reporting?
A: Margin is often used in financial reports and investor presentations because it directly shows how much of your sales revenue translates into profit.

Q3: What’s a good profit margin?
A: It depends on the industry. Grocery stores may operate with margins as low as 2–5%, while software businesses can have margins above 70%.

Q4: Can this calculator be used for services, not just products?
A: Yes. Simply treat the "cost price" as your total cost to deliver the service (labor, materials, time), and the "selling price" as what you charge the client.

Q5: Does this calculator account for taxes or hidden costs?
A: No, it’s a basic profit tool. For full financial planning, you’ll want to include taxes, overhead, and other expenses in your cost calculations before entering numbers.

Q6: Can I use this for bulk or wholesale orders?
A: Absolutely. Just input the total cost of all units and the total selling price—the calculator will still give you correct margins and markup.