Profit Margin Calculator – Margin, Markup and Pricing for a Target Margin
This profit margin calculator is for sellers, small-business owners and students. It shows how much of each sale you keep after the cost of goods, payment fees, marketplace commission and shipping. It can also work out the price that hits a target margin, show what a price cut does to the volume you need, blend margins across several products and read gross, operating and net margin from an income statement. All the maths runs in your browser.
Margin vs markup: the 30 → 50 example
Buy something for 30 and sell it for 50, and you make 20. As a margin, that is profit divided by the price: 20 ÷ 50 = 40%. As a markup, it is profit divided by cost: 20 ÷ 30 = 66.67%. The two figures describe the same sale, but they aren't interchangeable. Margin can never reach 100%, because profit can't be larger than the price. Markup has no upper limit.
How to price for a target margin
The most common pricing mistake is adding the margin you want to your cost. Adding 40% to 30 gives 42. The profit of 12 is only a 28.57% margin, because margin is measured against the price, not the cost. The correct formula divides instead: price = cost ÷ (1 − margin), so 30 ÷ 0.6 = 50. As the target rises, the gap widens. At an 80% margin the right price is five times cost, while "cost plus 80%" is only 1.8 times cost. The Target price tab plots both lines and can round up to a whole number, .99 or .95 without dropping below the target. It can also solve the other way: the most you can pay a supplier to hit a margin at a fixed shelf price.
How percentage fees eat your margin
A 40% gross margin is not what you keep once card fees, marketplace commission and shipping are paid. With 2.9% + 15% in percentage fees and 4.80 in fixed costs per unit, the 50 sale above leaves 6.25, a margin after selling costs of 12.50%. This figure is also called the contribution margin. Percentage fees also change the target-price formula to (cost + fixed costs) ÷ (1 − margin − fee %), which is why fees and a high target together can make a margin impossible to reach.
Why a 10% price cut needs 33% more sales
At 50 with a cost of 30, each sale earns 20. Cut the price by 10% to 45 and each sale earns 15. To keep the same total profit you need 20 ÷ 15 = 1.33 times as many sales, or 33.33% more volume. The price-change panel draws this curve and shows the point below which each sale loses money. Selling costs make it steeper: with the fees above, the same 10% cut needs about 191% more sales.
Blended margin vs average margin
If you sell several products, your overall margin is total gross profit ÷ total revenue, not the average of each product's margin. Three products at 75%, 20% and 50% average 48.33%. But if most of your revenue comes from the 20% product, the blended margin is only 33.33%. The Product mix tab compares each product's share of revenue with its share of profit.
Gross, operating and net margin on an income statement
Gross margin subtracts only the cost of goods sold, so it reflects pricing and production cost. Operating margin also subtracts running costs such as salaries, rent, depreciation and amortisation, so it shows how well the business runs. Net margin subtracts interest and tax too, leaving what belongs to the owners. The Business tab builds a waterfall from revenue down to net profit, including operating losses.
What this calculator leaves out
Fixed overheads and break-even unit counts, markup-first pricing tables and margin trends across several periods are outside its scope. The price-change maths also assumes your unit cost and selling costs stay the same as volume changes.