How it works
Profit (selling price minus cost) is divided by the selling price, then multiplied by 100.
Formula: Profit margin = (selling price − cost) ÷ selling price × 100
Examples
The same sale as the Markup example
A cost of 100 sold for 130 (a 30% markup) has a margin of (130 − 100) ÷ 130 × 100 ≈ 23.1%, not 30%.
Things to keep in mind
- Margin and markup are not the same calculation: margin divides profit by the selling price, markup divides the identical profit by the cost instead. See the Markup Calculator for that version.
- A selling price below cost gives a negative margin, meaning a loss — this is a meaningful, correct result, not an error.
- The selling price cannot be zero.