Handeware
Business

Profit margin

40%
Profit
$40.00
Markup on cost
66.7%

This is arithmetic for general information, not financial advice.

Margin Calculator

Profit margin is the share of the selling price you keep as profit. Markup is the profit measured against cost. People often mix the two up, so this shows both.

How it works

Profit is the price minus the cost. Margin is the profit divided by the price, times 100. Markup is the profit divided by the cost, times 100.

A markup on cost always gives a smaller margin than its percentage suggests, which is why both numbers are shown side by side.

Worked example

An item that costs $60.00 and sells for $100.00 makes $40.00 of profit. The margin is 40% of the price, and the markup on cost is 66.7%.

Questions

Which number matters more?

Margin tells you what share of each sale is kept. Markup tells you how much was added to cost. Both answer different questions.

Does this include fees and shipping?

No. Add any fees or shipping to the cost first if you want the real profit.

Why is margin always lower than markup?

Margin uses the price as its base and markup uses cost. The price is always the larger number, so the margin comes out smaller.

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