Profit Margin Calculator
Calculate gross margin, net margin, markup, and break-even instantly. Know your numbers before you set your prices.
Results
Profit
$40.00
Gross Margin
40.00%
Markup
66.67%
Revenue
$100.00
Cost $60.00 Sell $100.00 = 40.00% margin / 66.67% markup
Break-Even Calculator
How many units do you need to sell to cover your fixed costs?
You need to sell 125 units to break even
Revenue at break-even: $12,500.00
Create an invoice with your calculated pricing
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Frequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after deducting costs. Gross margin considers only direct costs (COGS), while net margin includes all expenses like overhead, taxes, and operating costs.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price (revenue-based). Markup is profit as a percentage of the cost (cost-based). For example, buying at $60 and selling at $100: margin is 40%, markup is 66.7%. Margin is always lower than markup for the same transaction.
What is a good profit margin?
Good margins vary by industry. Software/SaaS: 70-90% gross margin. Retail: 25-50%. Manufacturing: 25-35%. Services/consulting: 50-70%. A net margin above 10% is generally considered healthy for most businesses.
How do I calculate break-even point?
Break-even is the number of units you need to sell to cover all costs. Formula: Fixed Costs ÷ (Selling Price - Variable Cost per Unit). Our calculator shows this when you enter your fixed costs.
How do I set prices using margin?
To achieve a target margin: Selling Price = Cost ÷ (1 - Target Margin%). For example, to achieve 40% margin on a $60 cost: $60 ÷ (1 - 0.40) = $100 selling price.
Understanding Profit Margins for Your Business
Profit margin is one of the most important metrics for any business, freelancer, or contractor. It tells you how much of each dollar of revenue you actually keep as profit. Understanding your margins helps you set competitive prices, identify cost-saving opportunities, and make smarter business decisions.
Margin vs. Markup: The Critical Difference
Many business owners confuse margin and markup, but they're very different. Margin is calculated against the selling price: (Revenue - Cost) / Revenue. Markup is calculated against the cost: (Revenue - Cost) / Cost. A 50% markup only gives you a 33.3% margin. This distinction matters when pricing — if you want a 40% margin, you need a 66.7% markup.
Setting the Right Price
To achieve a target profit margin, use the formula: Price = Cost / (1 - Desired Margin). For example, if your cost is $75 and you want a 40% margin: $75 / (1 - 0.40) = $125. This pricing approach ensures you cover costs while hitting your profitability targets. For invoicing with calculated margins, try our free invoice generator.