Margin Calculator
Gross margin and target price from margin.
The Margin Calculator is an essential tool for business owners, product managers, and pricing analysts. Calculate your gross profit margin percentage from cost and revenue data, find the selling price needed to achieve a target margin, or work backwards from revenue to find implied costs. Understanding your margins is fundamental to sustainable pricing — a business can have strong revenue but thin margins that leave little room for operating expenses, taxes, or reinvestment. This calculator helps you see exactly where you stand.
Margin Calculator
Formula
Examples
Product Costing $40, Sold for $60
Calculate the profit margin on a product with $40 cost and $60 selling price.
→ Gross Margin: 33.3%, Profit: $20
Target Margin Pricing — 45% Margin
Find the selling price needed to achieve 45% margin on a $55 product.
→ Required selling price: $100.00
E-commerce Product at $12 Cost
A dropshipping product costs $12 delivered. What price achieves a 60% margin?
→ Required selling price: $30.00, Profit: $18.00
Comparing Two Products
Product A: cost $80, price $120. Product B: cost $15, price $35. Which has a better margin?
→ Product A: 33.3% margin. Product B: 57.1% margin. Product B is more profitable per dollar of revenue.
Tips
- ✓Focus on margin percentages rather than absolute profit figures when comparing products.
- ✓Track margins over time — shrinking margins often signal rising costs before they hit profits.
- ✓A high revenue business with 2% margins needs every sale to go right; a 50% margin business has much more cushion.
- ✓Factor in returns, shrinkage, and payment processing fees when calculating true margins for e-commerce.
Frequently Asked Questions
What is gross profit margin?
Gross Margin % = (Revenue − Cost of Goods Sold) / Revenue × 100. It shows what percentage of each dollar of revenue remains after covering direct production or purchase costs. Operating expenses, taxes, and interest are not included.
What is the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. Example: cost $60, price $100 → profit $40. Margin = 40/100 = 40%. Markup = 40/60 = 66.7%. They describe the same profit from different reference points.
What is a good profit margin?
It varies widely by industry. Software/SaaS: 70–80%. Retail (physical goods): 2–5%. Restaurants: 3–9%. Manufacturing: 5–20%. Healthcare: 10–20%. Always compare to industry benchmarks, not absolute numbers.
How do I find the selling price to achieve a target margin?
Use the formula: Selling Price = Cost / (1 − Target Margin / 100). Example: Cost $50, target margin 40% → Price = $50 / (1 − 0.40) = $50 / 0.60 = $83.33.
What is the difference between gross margin and net margin?
Gross margin subtracts only cost of goods sold (COGS) from revenue. Net margin subtracts COGS plus all operating expenses, interest, and taxes. Net margin gives the full picture of profitability.
Why does a 50% markup not equal a 50% margin?
Because they use different bases. 50% markup on a $100 cost = $150 price → margin = $50/$150 = 33.3%. The margin is always lower than the markup for the same profit amount.