Calculate profit margin for a retail product
Enter the cost price and actual selling price of one item using the same currency and tax basis. The calculator shows unit profit, profit margin and markup, so you can see the same sale from both the selling-price and cost perspectives.
Profit margin formula
Unit profit equals selling price minus cost price. Profit margin equals unit profit divided by selling price, multiplied by 100.
For example, a shop buys an item for 80 and sells it for 100. The unit profit is 20 and the gross margin is 20%. The markup is 25% because markup compares the same 20 with the 80 cost price.
Margin and markup answer different questions
Margin shows how much of the selling price remains after the entered item cost. Markup shows how much was added to that cost. A 25% markup does not produce a 25% margin. Use the retail markup calculator when you want to set a price from cost or reverse-calculate the markup on an existing price.
What this result does not include
This is a gross item calculation, not net business profit. Payment fees, delivery, packaging, damage, discounts, returns, tax treatment, rent, wages and other operating expenses can change what the business keeps. Enter a discounted selling price when checking a discounted sale. A loss appears as a negative result, while a percentage with a zero denominator is not defined.
Worked retail margin examples
- Regular sale: cost 240 and selling price 300 produce unit profit of 60, a 20% margin and a 25% markup.
- Discounted sale: if the same item sells for 270, unit profit falls to 30 and margin falls to about 11.11%. The original ticket price should not be used when the customer paid a lower amount.
- Sale below cost: cost 240 and selling price 220 produce a loss of 20 and a negative margin. A negative result is a prompt to check the price and cost basis, not an error in the calculator.
Use margin to review a price, not to choose it alone
A target margin can help compare products, but the final price also depends on demand, competitor prices, taxes, expected discounts, payment costs, spoilage or damage, and the operating costs the item needs to support. Compare results on the same basis and review the price again when supplier cost changes.
For a promotional price, calculate the discount first with the discount calculator, then enter the reduced selling price here. To work forward from cost, use the selling price calculator.
Connect the calculation to store records
Check the cost against purchase and supplier records, keep approved prices in product records, and compare calculated item margin with recorded sales information. Inventory quantities and physical counts remain separate from this price calculation.
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Profit-margin questions this calculator answers
How do I calculate retail profit margin?
Subtract cost from selling price to find unit profit. Divide unit profit by selling price and multiply by 100. Enter the actual price paid by the customer when checking a discounted sale.
Why is margin lower than markup?
They divide the same unit profit by different amounts. Markup divides by cost; margin divides by the higher selling price when a sale is profitable. For example, cost 80 and selling price 100 produce 25% markup but 20% margin.
Is gross margin the same as net profit?
No. This calculator compares the entered item cost with selling price. It does not subtract rent, wages, payment fees, delivery, returns, tax effects or other operating expenses.