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.
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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