Use this free Profit Margin Calculator to turn revenue and cost into the numbers that actually matter: profit, profit margin % (gross margin), markup %, and a quick break-even revenue estimate when you include fixed costs. It’s built to be screenshot-friendly, shareable, and simple enough for everyday pricing decisions.
You can use this for a single product, a project quote, or a whole month of sales. The calculator supports two “cost styles”: total cost (all-in) or cost per unit with quantity. If you’re unsure, start with total revenue and total cost.
Profit margin is one of the cleanest ways to summarize how efficient a product, service, or business is at turning revenue into profit. But it’s also one of the most misunderstood metrics — mostly because people mix it up with markup, forget to include hidden costs, or compare margins across industries that have totally different economics.
This calculator focuses on a simple and widely used definition: profit margin (often called gross profit margin when costs represent cost of goods sold). It answers one question: “Out of every $1 of revenue, how many cents do I keep as profit after costs?”
Because margin uses revenue as the denominator, it’s the best number to compare performance across different price points. Markup uses cost as the denominator, so it’s often used when you start from your cost and want to decide a selling price (“cost-plus pricing”).
In the break-even line, F is fixed cost — things that don’t change much with each sale, such as software subscriptions, rent, or base labor. A fully accurate break-even model can get complex (especially with variable costs per unit, tiered fees, and taxes). Here, we keep it “everyday simple”: we show the minimum revenue needed to cover your entered cost plus fixed costs.
Suppose you sell a handcrafted candle for $30. Your materials and packaging cost $12 per candle. For one candle:
Notice how markup can look “huge” even though margin is the more common business health metric. A 150% markup here simply means you’re charging 2.5× your cost (because price = cost + markup×cost). If you run ads, offer coupons, or pay marketplace fees, that 60% margin can shrink quickly.
You quote a client $2,000 for a project. You’ll pay a contractor $1,200. Your profit is $800. Profit margin is 800 ÷ 2000 = 40%. Markup is 800 ÷ 1200 ≈ 66.7%.
Service businesses often forget to include “soft costs” like tools, revisions, and time spent selling the work. If you spend 6 hours in meetings and admin time but don’t bill for it, your true margin is lower. That’s why margin is most powerful when your cost estimate is honest and complete.
In a month, you make $12,000 in sales. Your product costs total $7,200. Profit is $4,800. Margin is 4800 ÷ 12000 = 40%.
If you also have fixed costs of $2,000 for tools, rent, and subscriptions, your break-even revenue estimate becomes: cost + fixed = 7,200 + 2,000 = $9,200. That means your month’s revenue needs to be above $9,200 before you’re “in the green” with the simplified model.
One viral trick: calculate your margin before and after discounts. If you post the “before vs after” screenshot in a founder group, ecommerce community, or a TikTok caption (“why 20% off nearly killed my profits”), it tends to get strong engagement because it feels counterintuitive — and it teaches something useful.
If you want a more “complete” business picture, margin is the first layer — then you subtract operating expenses (marketing, admin, rent, payroll) to get operating margin, and subtract interest/taxes to get net margin. This page stays intentionally focused on the everyday layer where most pricing decisions happen.
Profit margin uses revenue as the baseline: (profit ÷ revenue). Markup uses cost as the baseline: (profit ÷ cost). Margin is great for comparing profitability. Markup is great for building a selling price from cost.
Often yes in everyday conversations. Technically, “gross margin” usually means profit after direct costs (COGS), while “net margin” includes operating expenses, taxes, and interest. This calculator focuses on the simple revenue-minus-cost margin.
Then profit is negative and your margin is negative. The calculator will show a negative profit and margin, which is a useful warning that the price may be too low or costs may be underestimated.
If you know your cost and want a target margin, the selling price is: price = cost ÷ (1 − margin). Example: cost = $60 and target margin = 40% → price = 60 ÷ 0.60 = $100.
No. Tax treatment depends on your jurisdiction and whether you’re calculating from tax-inclusive or tax-exclusive revenue. For most business decisions, use net revenue (excluding tax you remit) when calculating margin.
If you’re a solo founder or freelancer, yes — include labor/time cost somewhere (even as a rough number). Otherwise you can accidentally “price” below a sustainable level without realizing it.
Try these viral scenarios and compare screenshots:
20 tools pulled from the Everyday category:
MaximCalculator provides simple, user-friendly tools. Always double-check any important numbers elsewhere.