Enter what you charge and what it costs you, and see your gross profit, profit margin, and markup — so you know whether a price actually makes money before you commit to it.
Gross margin only — it covers the direct cost of what you sell, before overhead like rent, software, and your own time. Aim for a margin that still leaves profit after those.
They're not the same number, and confusing them loses money:
A 50% markup is only a 33% margin. Price off margin, because margin is what's left to cover your overhead and pay you. This calculator shows both so you can't mix them up.
Profit margin is the share of a sale you actually keep: margin = (price − cost) ÷ price × 100. It is measured against the price, which is what makes it different from markup — measured against cost — and confusing the two is one of the most expensive mistakes in small-business pricing.
Add 50% markup to a $60 cost and you get a $90 price. But your profit ($30) as a share of that $90 price is only 33%, not 50%. Price off markup and you will consistently believe you are more profitable than you are. The safe habit is to decide the margin you need first, then back into the price: price = cost ÷ (1 − target margin). For a 40% margin on a $60 cost, that is $60 ÷ 0.60 = $100.
Sell a service for $1,200 that costs you $780 in labour and materials. Gross profit is $420, so your margin is 420 ÷ 1,200 = 35%. If a competitor undercuts you and you drop the price to $1,000 while cost holds, margin falls to 22% — a small price cut torched a third of your profitability. That sensitivity is why margin, not revenue, is the number to defend.
It varies by model, but many healthy small product businesses aim for a 40–50%+ gross margin so there is enough left after direct cost to cover overhead and still profit; service and trade work is often higher on labour, lower after materials. The most useful comparison, as always, is your own margin trend over time and across jobs — a falling margin is an early warning long before it shows up in the bank balance.
Subtract cost from revenue to get gross profit, then divide gross profit by revenue and multiply by 100. Example: $1,000 revenue − $600 cost = $400 profit ÷ $1,000 = 40% margin.
Margin is profit as a percent of the price; markup is profit as a percent of the cost. The same job can be "40% margin" and "67% markup" — this tool shows both.
It depends on the business, but for services and products a healthy gross margin usually starts around 40–50% — enough to cover overhead and still pay you after the direct costs.
Related: build a profit and loss statement · freelance rate calculator.
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It uses standard formulas and recalculates the moment you change a value, so the math is exact for the inputs you enter. Treat the result as a reliable planning estimate; for decisions with legal or tax consequences, confirm the figures with a qualified professional.
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Last reviewed: September 2026. Free to use, no signup — Profit Margin Calculator by ToolWise Digital.
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