Enter cost and selling price to get the profit margin as a percentage of the price.

Profit margin explained

Profit margin expresses profit as a share of the selling price, which makes it a clean measure of how much of each sale you keep. Because it is based on price, margin can never exceed one hundred percent, and that ceiling is a useful sanity check.

Margin is the figure finance teams watch, since it shows how much room exists for discounts, marketing, and overhead before a sale stops being profitable. A thin margin means small cost increases or price cuts can erase the profit entirely.

Do not confuse margin with markup. They describe the same deal but divide profit by different numbers, so the same transaction produces two different percentages, a point covered on the markup page.

The formula

Worked example

Cost 40, price 60: profit 20, margin = 20 / 60 = 33.33%.

How to read your result

Margin is profit as a share of the selling price, so it can never exceed 100%. Do not confuse it with markup, which is based on cost.

Frequently asked questions

Margin vs markup - what is the difference?

Margin divides profit by price; markup divides profit by cost. The same deal yields different percentages.

Why does margin matter?

It shows how much of each sale is profit, which drives pricing and discount decisions.

Can margin be negative?

Yes - if you sell below cost, the margin is negative.

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