HesapHanem

Profit Calculator

From cost and selling price: profit amount, margin % and markup %.

How it is calculated

Three numbers come from the cost and the selling price: profit = sell − cost, margin = profit / sell × 100 and markup = profit / cost × 100. Margin is the share of the selling price that is profit, while markup is the profit as a share of the cost. Because the cost is always smaller than the price when you make money, the markup is always the larger of the two. If the selling price is zero the margin is shown as zero, and if the cost is zero the markup is shown as zero. Both inputs must be zero or more. Use the same price basis for both (per unit or total), and decide whether sales tax is included in the price you enter.

Worked example

An item costs 60 and sells for 100. Profit = 100 − 60 = $40.00. Margin = 40 / 100 × 100 = 40.00%. Markup = 40 / 60 × 100 = 66.67%. Adding a 40% markup to the cost instead would give a price of only 84 and a margin of about 28.57%.

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Common mistakes

  • Treating markup and margin as the same thing and setting a price by adding the margin percentage to the cost.
  • Entering a price that includes VAT or sales tax while the cost is without tax.
  • Mixing a per-unit cost with a total sales figure.
  • Leaving out shipping, fees or discounts from the cost, which makes the profit look larger than it is.
  • Expecting a negative result for a loss: the tool does not accept negative amounts, but a price below cost gives a negative profit and margin.

Sources

About this calculator

This tool breaks a sale down into three related numbers: the raw profit (selling price minus cost), the margin (profit as a percentage of the selling price), and the markup (profit as a percentage of the cost). Margin and markup answer different questions — margin tells you how much of each sales dollar is profit, while markup tells you how much you added on top of what you paid — and confusing the two is one of the most common pricing mistakes small businesses make.

Retailers, wholesalers and freelancers use it to set prices that hit a target margin, or to check whether a supplier's cost increase still leaves room for profit. It's also handy when comparing products or services with different cost structures, since a high markup doesn't always mean a high margin.

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Comments (1)

  • Editorial team

    The tool works forward from a price, but pricing usually starts from the margin you want. To hit a target margin, divide the cost by one minus that margin: a cost of 45 and a 30% margin means 45 ÷ 0.70 = 64.29, which you can type back in to confirm 30.00%. If a marketplace takes a fee, enter the amount you actually receive as the selling price. What margin are you aiming for, and what costs go into yours?

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