Business
Profit Margin Calculator
Margin from cost and price, or the price needed to hit a target margin.
Margin is measured against price
(Price − cost) ÷ price. A $30 item sold for $75 makes $45, which is a 60% margin. The same $45 is a 150% markup, because markup is measured against cost instead. Both are correct and they are not interchangeable.
Solving for price
To hit a target margin, price = cost ÷ (1 − margin). A 60% margin on a $30 item needs $75, not $48 — dividing rather than adding is the whole trick, and adding is what most people do.
A margin of 100% is impossible at any price above zero: the formula divides by zero, and no price makes the cost disappear.
Which costs to include
For gross margin: the product, inbound shipping, and payment processing. Not advertising — that comes out of the margin afterwards, and folding it in here means your break-even ROAS calculation will double-count it and set the bar too low.