PocketProfit Margin Calculator
Calculate sales profitability. Input your cost and selling price to find your gross margin percentage and markup ratios.
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Profit Margin
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Gross Profit
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Markup Rate
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Margin vs Markup Formulas
Margin and Markup measure the same profit relationship in different ways:
- Gross Profit: Selling Price - Cost Price
- Profit Margin: (Gross Profit / Selling Price) × 100
- Markup: (Gross Profit / Cost Price) × 100
Worked Example
If your cost to buy or manufacture a product is ₹100, and you retail it for ₹150:
- Gross Profit: ₹50
- Profit Margin: (50 / 150) × 100 = 33.33%
- Markup Rate: (50 / 100) × 100 = 50.00%
Frequently Asked Questions
What is the difference between margin and markup?
Profit margin computes profit as a percentage of the selling price (revenue). Markup computes profit as a percentage of the cost price (investment cost).
Which is a better metric for retail businesses?
Most companies use profit margin for financial reporting because it shows how much of every rupee in sales is retained as profit. Markup is useful for setting retail prices on wholesale items.
Can profit margin be negative?
Yes. If the selling price is lower than the cost price, the business is selling at a loss, yielding a negative profit margin and markup.
What is a healthy profit margin for businesses?
Healthy margins depend on the industry. Supermarkets operate on thin margins (1% to 5%), whereas software SaaS businesses can have gross margins exceeding 70-80%.
How is operating margin different from gross margin?
Gross margin only subtracts direct cost of goods sold (COGS). Operating margin subtracts administrative overheads, marketing, payroll, and rent, representing real operational efficiency.