Profit Margin Calculator: Margin, Markup & Commission
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Profit Margin Calculator
This calculator handles the four questions sellers ask about pricing: what margin and markup a cost-and-price pair produces, the selling price implied by a markup, the price needed to hit a target margin, and a commission on a sale. Every mode shows the formula and the profit.
Margin vs. markup — the key difference
Margin and markup use the same profit but a different base, so they are never equal. Margin divides profit by the selling price; markup divides it by the cost.
| Metric | Formula | Cost 40, price 100 |
|---|---|---|
| Profit margin | (Price − Cost) ÷ Price × 100 | 60 ÷ 100 = 60% |
| Markup | (Price − Cost) ÷ Cost × 100 | 60 ÷ 40 = 150% |
Pricing for a target margin
To find the price that yields a margin you want, divide the cost by (1 − margin ÷ 100). For a 60% margin on a 40 cost: 40 ÷ (1 − 0.60) = 40 ÷ 0.40 = 100. A 50% margin always means doubling the cost; a 25% margin means dividing the cost by 0.75.
Commission
A commission is a straight percentage of a sale amount: 5% on a 2,000 sale is 2,000 × 0.05 = 100. For price reductions rather than earnings, use the discount calculator; for the percentage between any two numbers, use the percentage calculator.
FAQs
Subtract the cost from the selling price to get the profit, divide by the selling price, and multiply by 100. For a cost of 40 and a price of 100: (100 − 40) ÷ 100 × 100 = a 60% margin.
They use the same profit but a different base. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A 40 cost sold at 100 is a 60% margin but a 150% markup — same 60 profit, different denominator.
Subtract the cost from the selling price, divide by the cost, and multiply by 100. For a cost of 40 and a price of 100: (100 − 40) ÷ 40 × 100 = a 150% markup.
Divide the cost by (1 − margin ÷ 100). For a 50% margin, price = cost ÷ 0.5 = cost × 2. A 40 item must sell for 80. Use the "Price for a target margin" mode above.
Multiply the sale amount by the commission rate divided by 100. A 5% commission on a 2,000 sale is 2,000 × 0.05 = 100. Use the "Commission" mode above.