Free Tool — Profit Margin Calculator
Profit Margin Calculator
Enter your cost price and selling price to see your profit, margin % and markup % at once.
Profit
₹50.00
Profit margin
33.3%
Markup
50%
Why margin and markup both matter
Profit margin tells you what share of your selling price is actual profit — useful for checking whether a product or dish is genuinely worth selling at its current price. Markup tells you how much you've added on top of cost — useful when you're setting a price from scratch.
The two numbers look similar but aren't the same: a 50% markup on cost is only a 33% margin on the selling price. This calculator shows both together so you can sanity-check pricing decisions without mixing the two up.
Profit margin and markup formulas
Profit = Selling price − Cost price. Profit margin % = (Selling price − Cost price) ÷ Selling price × 100. Markup % = (Selling price − Cost price) ÷ Cost price × 100.
How to use the profit margin calculator
- 1Enter the cost price of one unit: what you paid the supplier plus freight and packing, or the plate cost of a dish.
- 2Enter the selling price of that unit, excluding any GST you collect from the customer.
- 3Read the profit, the profit margin % and the markup %. All three update as you type.
- 4Lower the selling price to see how much margin a discount or combo offer would cost you.
- 5Repeat for your top-selling items to see which ones earn most of your profit.
Worked example: margin on a ₹999 kurta
A clothing shop buys a kurta for ₹640 including freight and sells it for ₹999 before GST. Enter both figures in the profit margin calculator and it shows a profit of ₹359, a profit margin of 35.9% (359 ÷ 999 × 100) and a markup of 56.1% (359 ÷ 640 × 100). Put another way, about 36 paise of every rupee the customer pays is profit before rent, salaries and other overheads.
At the end-of-season sale the price drops to ₹849. Profit falls to ₹209, margin to 24.6% and markup to 32.7%. A 15% price cut has taken away about 42% of the profit on each kurta, so the shop must sell about 1.7 kurtas at the sale price to earn what one earned at full price. That is the real cost of a markdown.
Common profit margin mistakes
- Using the printed MRP as the selling price. MRP includes GST and you may sell below it, so enter what customers actually pay, net of tax.
- Leaving freight, loading, packing or wastage out of the cost price, which makes every margin look better than it is.
- Forgetting returns, damaged pieces and free samples. Their cost has to be recovered from the units you do sell, so allow for it in your price.
- Using one average margin for the whole shop. High- and low-margin items blend together, so check top sellers one by one.
- Not rechecking after a supplier price rise. If cost goes from ₹100 to ₹120 on an item sold at ₹150, margin drops from 33.3% to 20%.
Related pricing calculators
Profit margin calculator FAQs
Profit margin % = (Selling Price − Cost Price) ÷ Selling Price × 100. It measures profit as a percentage of the selling price.
Margin is profit divided by selling price; markup is profit divided by cost price. They use the same profit figure but different denominators, so a given profit amount produces a higher markup % than margin %.
It varies widely by industry — restaurants often run 10-15% net margin, while retail margins vary by category. Compare your margin against your own historical numbers and industry benchmarks rather than a single universal target.
Most businesses set prices using markup on cost, then check the resulting margin to confirm it meets their profit target. Using both avoids underpricing items that look fine by one measure but not the other.
If you are GST-registered under the regular scheme and claim input tax credit, leave GST out of both prices. The GST you collect belongs to the government, and the GST you paid on purchases comes back as credit. If you are under the composition scheme or not registered, you cannot claim that credit, so include the GST you paid in your cost price; composition tax on your turnover also comes out of your margin.
Gross margin is what is left from sales after the direct cost of the goods, which is closest to what this calculator shows for a single item. Net margin is what is left after every expense, including rent, salaries, electricity, interest and tax. A shop can have a healthy 30% gross margin and still make a loss if its overheads are high.
No. Profit can never be larger than the selling price, so margin stays below 100% and reaches it only if the cost is zero. Markup has no ceiling. Buying at ₹50 and selling at ₹200 is a 300% markup but a 75% margin. For the same item, the markup figure is always the higher of the two, so make sure you know which one a supplier or salesperson is quoting.
Divide the cost by one minus the target margin. For a ₹600 cost and a 40% margin, that is 600 ÷ 0.60 = ₹1,000. You can confirm it here by entering ₹600 as the cost price and ₹1,000 as the selling price; the calculator will show a ₹400 profit, a 40% margin and a 66.7% markup.
See your real margins, automatically
Setu Dine tracks cost and sales together, so you always know your margin without doing the maths yourself.
Explore Setu Dine →