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Profit Margin Calculator
Enter your cost and selling price to get your profit, margin, and markup in seconds. Or let ReInvestWealth track your revenue, costs, and profit automatically.
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Profit margin33.33%
Profit$50.00
Markup50%
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The formula
How to calculate profit margin
Margin is your profit measured against the price you sell at.
Profit = Selling price − Cost
Profit margin % = (Selling price − Cost) ÷ Selling price × 100
Don't mix them up
Margin vs markup
Same sale, two different percentages. Pricing off the wrong one quietly eats your profit.
An item that costs $100 and sells for $140 earns $40 profit.
Margin
28.6%
$40 ÷ $140 price
Markup
40%
$40 ÷ $100 cost
Same $40 profit. Margin is always the smaller number.
Margin, profit, and your IRS return
Margin measures profit on a single sale. The IRS taxes your total business profit for the year, reported on the form for your structure.
Sole proprietorSchedule C with Form 1040
CorporationForm 1120 (or 1120-S)
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FAQ
Profit margin, explained
How do I calculate profit margin?
Profit margin is your profit as a percentage of the selling price. Subtract the cost from the selling price to get the profit, then divide by the selling price and multiply by 100. An item that costs $100 and sells for $140 has a $40 profit and a 28.6% margin (40 ÷ 140). The calculator above does it instantly and also shows the markup.
What's the difference between margin and markup?
Both measure profit, but against different bases. Margin is profit divided by the selling price; markup is profit divided by the cost. The same $40 profit on a $100 cost is a 28.6% margin but a 40% markup. Margin is always the smaller number for the same sale. Use the markup calculator when you want to set a price from a cost.
What is gross profit margin vs net profit margin?
Gross profit margin looks at revenue minus the direct cost of what you sold, as a percentage of revenue. Net profit margin goes further and subtracts all other expenses (overhead, wages, taxes) too. This calculator computes gross margin on a single item or job. For net margin across your whole business, you need your full books.
What is a good profit margin?
It depends heavily on your industry. Service businesses often run higher gross margins than product resellers, and net margins in the high single digits to low teens are common across many businesses. Rather than chase a benchmark, track your actual margins over time and watch the trend. ReInvestWealth makes that automatic.
Do I report margin or profit to the IRS?
You report profit, not margin. Margin is a measure of profitability; the IRS taxes your net business profit for the year. Sole proprietors report it on Schedule C with Form 1040, and corporations file Form 1120 (or 1120-S for an S corporation).
Is this profit margin calculator free?
Yes, it's free with no sign-up required. ReInvestWealth is accounting software that tracks your revenue, costs, and profit automatically, so you can see real margins across your whole business, not just one item. You can start a free 30-day trial anytime.
More free tools
See your real margins, automatically.
A calculator gives you gross margin on one item. Let ReInvestWealth track your revenue, costs, and profit across the whole business, so your margins are always based on real numbers.