Pricing
Profit Margin Calculator
Calculate gross margin and markup, or set prices from desired margin percentages.
Result
Revenue build-up
Cost plus profit explains the full selling price.
What does the Profit Margin Calculator calculate, and which formula does it use?
The Profit Margin Calculator works out gross margin as profit divided by revenue and markup as profit divided by cost: a $100 sale that costs $60 is a 40% margin and a 66.7% markup. In price mode it runs the other way, price = cost ÷ (1 − target margin), so a 40% margin on a $60 cost needs a $100 price.
Last updated .
How to use it
- Choose Calculate Margin when you know price and cost, or Set Price from Margin when you know cost and need a selling price target. Cost should include the real delivery cost of the product or service, not just the most visible direct expense.
- Read revenue or price, cost, profit, gross margin percent, and markup percent. As a rough benchmark, retail often lives around 20-40% gross margin, services around 30-50%, and software around 60-80%, so interpretation depends on business model.
- Use the result to decide whether the offer is genuinely profitable or only looks acceptable on revenue. If cost is close enough to revenue that margin lands in the teens, small discounts or scope changes can wipe out profit quickly.
- When using target margin mode, test the required price against what the market will actually tolerate. If the needed price is too high, fix cost structure, packaging, or scope before forcing a margin target that customers will not pay.
- Re-run after every supplier, labor, or packaging change and review by SKU or service tier each month. Track margin by channel over time because one discount-heavy channel can drag down an otherwise healthy blended average.
Questions people usually ask
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.
Is this professional advice?
No. Outputs are business planning estimates — not legal, tax, or accounting advice.
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Use it from code
The same calculation as a JavaScript module you can import. It runs where you import it, with no request, key or rate limit.
import { compute } from "https://aibizhub.io/engines/profit-margin-calculator.js";Input and output contract, TypeScript types and the guide for agents.