Calculate profit margins in a few simple steps.
Input the cost or purchase price of the item.
Input the selling price or revenue.
Click calculate to compute margins.
Review gross profit, profit margin percentage, and markup.
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A 50% markup equals a 33% margin.
Good margins vary by industry. Retail may be 2-5%, software 70-90%, and restaurants 3-5%. Higher margins generally indicate better profitability.
To convert margin to markup: Markup = Margin / (1 - Margin). For example, a 40% margin equals 67% markup.