What is the difference between margin and markup?

Margin is profit divided by revenue, while markup is profit divided by cost. Markup is always the larger percentage for a profitable sale.

How is profit margin calculated?

Subtract cost from revenue to get profit, then divide by revenue and multiply by 100 for the margin percentage.

Can the margin be negative?

Yes. If the cost is greater than the revenue, the profit and margin are negative, indicating a loss.

Finance Calculators

Profit Margin Calculator

Calculate profit, profit margin and markup from revenue and cost.

Free browser toolRuns in your browserNo sign-up

Revenue / selling priceCurrencyCost

Profit margin

40%

$400.00

Profit

40%

Margin

66.67%

Markup

Revenue composition

Cost $600.00Profit $400.00

Margin is profit as a share of revenue, while markup is profit as a share of cost. Margin is always the smaller of the two for a profitable sale.

Margin and markup formulas

Margin measures profit against revenue, while markup measures the same profit against cost. Their denominators are different.

Profit = Revenue - Cost; Margin = Profit / Revenue; Markup = Profit / Cost

Revenue: Selling price or sales income
Cost: Cost of the goods or service

Worked example

A $100 sale with an $80 cost creates $20 profit, a 20% margin and a 25% markup.

Practical tips

Do not confuse margin and markup
A target 25% margin requires a higher selling price than a 25% markup.
Include full costs
Overheads, payment fees and returns can reduce the true net margin.

About the Profit Margin Calculator

The Profit Margin Calculator finds your profit and expresses it in two useful ways: profit margin and markup.

Profit is revenue minus cost. Profit margin is profit as a percentage of revenue, while markup is profit as a percentage of cost.

Margin and markup are often confused but always differ. For the same sale, margin is the smaller percentage. All maths runs in your browser.

Key features

Profit, margin and markup
Clear margin versus markup distinction
Handles a loss when cost exceeds revenue
Locale-aware currency formatting

How to use

1Enter the revenue or selling price and choose a currency.
2Enter the cost.
3Read the profit, margin percentage and markup percentage.

Examples

Profit margin

Input: Cost 80, price 100

Output: Profit 20, margin 20%

Profit is price minus cost, and margin is profit divided by price.

Frequently asked questions

What is the difference between margin and markup?: Margin is profit divided by revenue, while markup is profit divided by cost. Markup is always the larger percentage for a profitable sale.
How is profit margin calculated?: Subtract cost from revenue to get profit, then divide by revenue and multiply by 100 for the margin percentage.
Can the margin be negative?: Yes. If the cost is greater than the revenue, the profit and margin are negative, indicating a loss.

Open a related tool to prepare your files or refine the finished result.