Profit Margin Calculator: Measure the Percentage of Selling Price That Is Profit
Profit margin is the percentage of the selling price that remains after cost. It is the language of financial statements and the most useful ratio for judging whether a price (or a discounted price) still delivers acceptable residual profit. This page focuses on calculating and interpreting margin in a pricing context.
Use the free Discount & Markup Calculator to obtain margin from cost and selling price, or to find the selling price required for a target margin.
Profit Margin Formula
A step-by-step guide appears on the how to calculate profit margin page. The relationship with markup is explained in full on the markup vs margin page.
Practical Example
Cost $50, Selling price $100 → Profit $50 → Margin 50 %.
The corresponding markup is 100 %. These two percentages describe the same economics from different reference points.
Why Margin Matters After Discounts
When you apply a discount, the selling price falls and margin falls with it. Calculating the post-discount margin is the only reliable way to know whether the promotion is still profitable. See the discount calculator and selling price after discount pages for the discount side of the process.
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Frequently Asked Questions
How do you calculate profit margin?
Profit Margin = (Selling Price − Cost) ÷ Selling Price × 100. The result is the percentage of the selling price that is profit.
Is profit margin the same as markup?
No. Margin is based on selling price; markup is based on cost. They produce different percentages for the same cost and price.
Can the Discount & Markup Calculator show margin?
Yes. Enter cost and selling price to obtain the profit margin percentage, or enter cost and desired margin to obtain the required selling price.
What is a good profit margin?
It depends on the industry and business model. Focus on whether the margin covers operating costs, provides a buffer for discounts and leaves acceptable residual profit.
How does a discount affect margin?
A discount reduces the selling price and therefore reduces the margin (unless cost also falls). Always recalculate margin after setting a promotional price.
Where can I learn the step-by-step method?
See the How to Calculate Profit Margin page for a detailed walkthrough.
Final Call to Action
Calculate your profit margin
Know the margin that remains after every price and every discount. That single percentage protects profitability.
Open the free Discount & Markup Calculator