This free profit margin calculator works three ways: as a gross margin calculator (enter cost and price to get your margin and profit), as a markup calculator (mark cost up by a percentage to get the selling price), and as a target-margin selling-price calculator. Enter your numbers and every figure — profit, margin %, markup % and selling price — updates instantly in rupees.
How to calculate profit margin
Profit margin tells you what share of each sale you keep as profit. It is always measured against the selling price:
- Profit =
selling price − cost - Margin % =
(profit ÷ selling price) × 100
Example: an item costs ₹800 and you sell it for ₹1,000. Your profit is ₹200, and your margin is 200 ÷ 1,000 = 20%. So you keep 20 paise of every rupee of revenue as gross profit. Use the calculator above in Cost + Price → Margin mode to get this in one step, along with the equivalent markup.
Margin vs markup — the difference
This is the most common pricing mistake. Both margin and markup measure the same profit, but against a different base:
- Markup % =
(profit ÷ cost) × 100— profit as a percentage of cost. - Margin % =
(profit ÷ price) × 100— profit as a percentage of the selling price.
Because the selling price is always bigger than the cost, the margin is always a smaller number than the markup. If you mark cost up by 25% thinking you are making a 25% margin, you are actually making only 20%. Here is how common markups convert to margins:
| Markup % | Equivalent margin % |
|---|---|
| 10% | 9.1% |
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 200% | 66.7% |
How to set a selling price from a target margin
If you know the margin you want, do not simply add that percentage to cost — that gives you a markup, not a margin. To price for a target margin, divide the cost by one minus the margin:
- Selling price =
cost ÷ (1 − margin% / 100)
Example: for a 20% margin on a ₹800 cost, the price is 800 ÷ (1 − 0.20) = 800 ÷ 0.80 = ₹1,000. Compare that to a 20% markup, which would only give 800 × 1.20 = ₹960 — a real margin of just 16.7%. The Cost + Margin% → Price mode does this for you and guards against a margin of 100% or more (which has no finite price). The Cost + Markup% → Price mode prices the simple way with cost × (1 + markup / 100).
From margins to live P&L
A calculator answers one line. Running a factory means knowing the true margin on every product, after material, labour, scrap and overhead — and watching it change as input costs move. Inside OEMup ERP, cost is built up from your multi-level BOM, selling price comes from the order, and gross margin per product, per customer and per order is tracked automatically and rolled into a live profit & loss. No spreadsheet drift, no surprises at year-end. Start free or explore the full feature set to see costing and P&L handled end to end.
Profit Margin Calculator — frequently asked questions
How do I calculate profit margin?
Profit margin is profit divided by the selling price. First find profit = selling price − cost, then margin % = (profit ÷ price) × 100. If an item costs ₹800 and sells for ₹1,000, profit is ₹200 and the margin is 200 ÷ 1,000 = 20%. The calculator above does it instantly.
What is the difference between margin and markup?
Markup is profit as a percentage of cost (profit ÷ cost); margin is profit as a percentage of the selling price (profit ÷ price). Since price is always above cost, the margin is always the smaller number — a 25% markup is a 20% margin, and a 50% markup is a 33.3% margin.
How do I find selling price from margin?
Divide the cost by (1 − margin/100). For a 20% margin on a ₹800 cost: price = 800 ÷ 0.80 = ₹1,000. Do not just add 20% to cost — that is a 20% markup, which is only a 16.7% margin. Use Cost + Margin% → Price mode.
What is a good profit margin for manufacturing?
For manufacturing SMEs a gross margin of 25–35% is common, with net margin after overheads and tax often around 5–12%. Commodity and job-work parts run thinner; branded or engineered products can be higher. Benchmark against your own history and track gross margin per product to catch loss-making lines early.
Need more shop-floor maths? Try the free All Calculators, the Break-Even Calculator, or the Production Cost Calculator.
Related reading: How to Cost a Job in an Indian Factory — Material + Labour + Overhead — what belongs in cost before you add a margin — and why selling and admin cost must stay out of it.
Know your real margin on every product
OEMup builds cost from your BOM, tracks gross margin per product and rolls it into a live P&L — built for Indian manufacturing SMEs.
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