Calculate gross profit margin, markup percentage and profit amount from cost and revenue — results update instantly as you type.
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This profit margin calculator works as a gross margin calculator, markup calculator, and pricing tool for freelancers, e-commerce sellers, small business owners, and anyone who needs to understand the profitability of a product or service before setting a price.
Profit margin and markup are two different ways of expressing the same profit figure — but they are calculated differently and lead to very different numbers. Profit margin is calculated as profit divided by revenue (×100%), making it a measure of how much of each dollar of revenue is profit. Markup is calculated as profit divided by cost (×100%), making it a measure of how much above cost you are charging. A product that costs $40 and sells for $100 has a 60% profit margin and a 150% markup. The two numbers are related but not interchangeable — confusing them is one of the most common pricing mistakes in small business.
Knowing your gross margin is essential for setting sustainable prices. If your gross margin is below your operating expense ratio — the percentage of revenue consumed by rent, salaries, marketing, and other overhead — the business is losing money on every sale regardless of volume. Industry benchmarks vary: grocery retail typically operates at 25–30% gross margin, clothing retail at 50–60%, software at 70–80%, and professional services at 60–80%. Understanding where your margins sit relative to industry norms helps identify whether pricing or cost structure needs adjustment. For e-commerce sellers, tracking gross margin per SKU rather than across the whole catalog reveals which products are actually driving profitability and which are selling at insufficient margin to cover their share of overhead costs.