aibizhub
Tools Contact About

Profit Margin Calculator

Calculate gross margin and markup, or set prices from your desired margin percentage. Understand profitability at a glance.

Profit Margin Calculator

Results

Revenue / Price

$100.00

Cost

$60.00

Profit

$40.00

Gross Margin %

40.00%

Markup %

66.67%

Key metrics

  • Gross Margin: (Revenue – Cost) / Revenue × 100
  • Markup: (Revenue – Cost) / Cost × 100

Formulas & Definitions

Gross Margin %

(Revenue – Cost) / Revenue × 100

Shows the percentage of revenue left after direct costs.

Markup %

(Revenue – Cost) / Cost × 100

Shows how much you're marking up cost as a percentage of cost.

How To Use This Calculator

  1. Choose a mode: 'Calculate Margin' to analyze existing pricing, or 'Set Price from Margin' to calculate a target price.
  2. For Calculate Margin mode: enter your revenue/price and cost.
  3. For Set Price from Margin mode: enter your cost and desired margin percentage.
  4. Review gross margin %, markup %, and profit amount.
  5. Compare metrics across products or tiers to optimize pricing.
  6. Save a shareable link with your assumptions, then run one conservative and one optimistic scenario before deciding.

Frequently Asked Questions

What's the difference between gross margin and markup?

Gross Margin % = (Revenue - Cost) / Revenue × 100. Markup % = (Revenue - Cost) / Cost × 100. Markup is always higher than margin. A 50% margin ≈ 100% markup.

When should I use 'Set Price from Margin'?

Use this when you know your cost and target margin (e.g., 'I want a 40% margin on this product'). It calculates the required price.

Can I use this for services?

Yes. Cost includes labor, materials, and allocated overhead. Revenue is what you charge customers.

What's a healthy margin?

It varies by industry. Retail often targets 20-40%, software 60-80%, services 30-50%. Competitive and cost pressures drive your floor.

Is this tool free and private to use?

Yes. AI Biz Hub tools are free, no-signup browser tools. Inputs stay in your browser unless you choose to share a URL.

Can I use this with AI agents too?

Yes. Human mode is the default experience. If you use AI automation, open the optional 'For AI Agents' section for deterministic contracts.

Is this professional advice?

No. Outputs are business planning estimates — not legal, tax, or accounting advice.

Disclaimer

This is a planning estimate only and should not be used for financial reporting or tax purposes. Consult an accountant for accurate profitability analysis.

Business planning estimates — not legal, tax, or accounting advice.