Enter what an item costs you and what you sell it for. The calculator returns your gross profit, profit margin (profit as a percentage of the selling price) and markup (profit as a percentage of cost). Shopkeepers, resellers, D2C brands, freelancers and students preparing for exams mix up margin and markup all the time, and the gap between the two can mean a pricing mistake that costs real money.
How to use the profit margin calculator
- Cost price: what you paid for the product, or what it cost to make. Include freight and packaging if you want a true margin.
- Selling price: what the customer pays you, excluding GST, because GST is not your income.
- Press Calculate to see profit, margin % and markup %. A loss shows as a negative margin.
Formulas
Profit margin % = Profit ÷ Selling price × 100
Markup % = Profit ÷ Cost price × 100
Worked example
You buy a kurta for ₹600 and sell it for ₹1,000.
- Profit = ₹400
- Margin = 400 ÷ 1,000 = 40%
- Markup = 400 ÷ 600 = 66.67%
Same item, same profit, two very different percentages. If a supplier promises “40% margin” and you price at a 40% markup instead (₹840), your real margin is only 28.6%.
Margin vs markup conversion table
| Markup on cost | Equivalent margin on price |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20% |
| 33.33% | 25% |
| 50% | 33.33% |
| 66.67% | 40% |
| 100% | 50% |
| 150% | 60% |
Pricing for a target margin
To hit a specific margin, divide the cost by (1 − target margin):
For a 35% margin on a ₹650 cost: 650 ÷ 0.65 = ₹1,000. A common mistake is to add 35% to cost (₹877.50), which gives only a 25.9% margin.
Gross, operating and net margin
| Margin | What it subtracts | What it tells you |
|---|---|---|
| Gross margin | Cost of goods sold only | Whether each product is priced well |
| Operating margin | Also rent, salaries, marketing and other running costs | Whether the business model works |
| Net margin | Also interest and taxes | What the owners actually keep |
This calculator gives the gross figure for a single item. A product can show a healthy 40% gross margin and still lose money once marketplace commission, delivery and returns are counted.
Selling on Amazon, Flipkart or Meesho
For online sellers, the “cost” should include every per-order deduction, not just the purchase price:
- Referral or commission fee (often 5–20% of the selling price, depending on category)
- Closing or fixed fee, and shipping or weight-handling fees
- Payment gateway charges and TCS/TDS (claimable later, but they tie up cash)
- Expected return and RTO (return-to-origin) losses
- Packaging and advertising cost per order
Add these to your cost price before using the calculator to see your real margin per order.
Typical gross margins by business type
These vary a lot, but as a rough idea: grocery and FMCG retail usually runs at 10–25% gross margin, electronics retail 5–15%, apparel and fashion 40–60%, restaurants 60–70% on food cost (before rent and staff), and software or digital products 70–90%. Compare your own numbers with businesses like yours, not with the average.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. Buying at ₹600 and selling at ₹1,000 gives a 40% margin but a 66.67% markup.
How do I calculate profit margin percentage?
Profit margin % = (Selling price − Cost price) ÷ Selling price × 100. For cost ₹750 and price ₹1,000, the margin is 25%.
How do I find the selling price for a 30% margin?
Divide cost by (1 − 0.30). A ₹700 cost needs a selling price of ₹1,000 for a 30% margin. Adding 30% to cost gives only a 23% margin.
Should GST be included when calculating margin?
No. Use selling and cost prices excluding GST if you are registered and claim input tax credit, because the GST collected belongs to the government.
Can profit margin be more than 100%?
No. Margin cannot reach 100% because profit can never exceed the selling price. Markup can be any size: a 300% markup means selling at four times cost, which is a 75% margin.