Free tool · Pricing

Profit margin calculator

Work out your profit margin, markup, profit per unit and breakeven, or find the selling price you need for a target margin.

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  • Runs in your browser
1

Your prices and costs

Pick what you want to work out. Everything updates as you type.

What do you want to work out?

What one item or job costs you to make, buy or deliver.

What you charge for one item or job.

Items or jobs in a typical month.

Rent, salaries, insurance, software.

How it's calculated: margin = (price − cost) ÷ price. Markup = (price − cost) ÷ cost. Price for a target margin = cost ÷ (1 − margin), rounded up to the cent. Breakeven = fixed costs ÷ profit per unit, rounded up.

Profit margin Per unit

43.75%

margin on each sale, before fixed costs

Profit margin

43.75%

Markup

77.78%

Profit per unit

$35.00

Selling price

$80.00

Each month Estimate

Revenue

$8,000

Gross profit

$3,500

Net profit

$1,500

Breakeven units

58

At 100 units a month you're 42 above breakeven, with about $1,500 left after fixed costs.

How it works

Check your margin in three steps.

  1. 1

    Pick what to work out

    Your margin from a price you already charge, or the price you need to hit a target margin.

  2. 2

    Enter your costs

    What one item or job costs you, how many you sell a month and your monthly fixed costs.

  3. 3

    Read the numbers

    See margin, markup and profit per unit, plus monthly profit and how many sales it takes to break even.

Margin vs markup

Same profit, two different percentages.

Margin divides profit by the selling price. Markup divides it by the cost. Mixing them up is an easy way to price too low.

Profit margin

(Price − cost) ÷ price × 100. Something that costs $60 and sells for $100 has a 40% margin.

Markup

(Price − cost) ÷ cost × 100. The same $60 item sold for $100 has a 66.67% markup.

Converting between them

A 50% margin is a 100% markup, a 33.3% margin is a 50% markup and a 20% margin is a 25% markup. When you make a profit, markup is always the bigger number.

Typical margins

Gross margins vary a lot by industry.

These are rough ranges you'll often see quoted. Your own costs, location and model matter more, so use them as a sense check, not a target.

Professional services

Gross margins of roughly 50 to 70% are common, since most of the cost is people's time.

Home services

HVAC, plumbing and electrical businesses often land around 40 to 60% gross margin on jobs.

Retail and e-commerce

Often around 25 to 50% gross margin, depending on the product and how much you discount.

Restaurants

Gross margin after food costs is often 60 to 70%, but net margin after labor and rent is usually in single digits.

Construction

Gross margins of roughly 15 to 25% are common, with materials and subcontractors taking most of the price.

Software

Often 70 to 85% gross margin, because each extra customer costs little to serve.

FAQ

Profit margin questions.

Short answers about margin, markup, pricing and breakeven.

What is the difference between margin and markup?

Margin is profit as a share of the selling price. Markup is profit as a share of the cost. Buying at $50 and selling at $100 is a 50% margin but a 100% markup. Both describe the same $50 profit.

How do I calculate profit margin?

Subtract your cost from the selling price, divide by the selling price and multiply by 100. An item that costs $45 and sells for $80 makes $35 of profit, which is a 43.75% margin.

What is a good profit margin for a small business?

It depends on the industry. Service businesses often see gross margins of 50 to 70%, retail around 25 to 50%, and restaurants usually keep single-digit net margins. Compare yourself with businesses like yours, and check your margin covers your fixed costs with room to spare.

How do I price for a target margin?

Divide your cost by one minus the target margin. For a 40% margin on a $45 cost, that's $45 ÷ 0.6 = $75. In the calculator, choose Price from target margin and enter your cost and target. A margin can never reach 100%, because that would mean the cost is zero.

How do I work out my breakeven point?

Divide your monthly fixed costs by the profit you make on each unit, then round up. With $2,000 of fixed costs and $35 of profit per unit, you need to sell 58 units a month to break even.

Does it work for services, not just products?

Yes. Use what it costs you to deliver one job, like labor and materials, as the cost, and what you charge the client as the price. The math is the same.

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