Overview

The Margin Calculator determines the profit margin based on selling price and cost. Profit margin is the percentage of revenue remaining after subtracting cost, a key metric for evaluating business profitability. It is widely used in retail, wholesale, and e-commerce for pricing strategy and profit analysis.

Formula

Margin (%) = ((Selling Price − Cost) ÷ Selling Price) × 100
Profit = Selling Price − Cost

How to Use

1. 1Enter the cost (purchase price).
2. 2Enter the selling price (retail price).
3. 3Click 'Calculate' to see margin percentage and profit amount.
4. 4Optionally enter a target margin to reverse-calculate the required selling price.

Examples

Background

Profit margin is the ratio of profit to selling price, making it the most fundamental metric for evaluating business profitability. Average retail margins vary widely by industry: groceries typically range 25-35%, apparel 40-60%, and IT/electronics 20-40%. Margin is frequently confused with markup, which measures profit as a percentage of cost and always yields a higher figure than margin for the same profit. In business decision-making, it is important to distinguish between gross margin (revenue minus COGS) and net margin (after all expenses including operations and taxes).

Tips

• ✔Do not confuse margin with markup. Margin is based on selling price; markup is based on cost.
• ✔Compare your margin to industry averages to assess competitiveness.
• ✔Include all ancillary costs (shipping, packaging) in your cost for accuracy.
• ✔Be clear whether prices are inclusive or exclusive of tax.
• ✔Compare total profit between low-margin high-volume and high-margin low-volume strategies.

FAQ