Product Margin Calculator
Margin Is the Number That Actually Sets Your Prices
Profit margin answers a single, sharp question: of every dollar a product sells for, how much is actually profit? It's expressed as a percentage of the selling price, which is what makes it directly comparable across products with completely different price points — a $15 accessory and a $500 appliance can be judged side by side the moment their margins are known.
The Formula
The key detail is the denominator: margin divides profit by price, not by cost. That's what separates it from markup, a related but different figure that divides the same profit by cost instead — the two numbers look similar but are never equal except at 0%.
Where Margin Drives Decisions
- Setting a target price — sellers commonly work backward from a target margin (say, 40%) to figure out what price a known-cost product needs to sell at.
- Comparing product lines — margin lets a business rank SKUs by profitability per sale, independent of how expensive each one is.
- Discount planning — knowing the current margin shows exactly how much room exists for a sale or coupon before a product stops being profitable.
Margin at a Glance
| Selling price | Cost | Margin |
|---|---|---|
| $20.00 | $10.00 | 50.00% |
| $50.00 | $30.00 | 40.00% |
| $100.00 | $40.00 | 60.00% |
| $15.00 | $9.00 | 40.00% |
| $200.00 | $150.00 | 25.00% |
All margins computed directly from the calculator's own formula. Note that a $50 price with $30 cost and a $15 price with $9 cost both land at 40% margin — margin is scale-independent.
How to Use This Calculator
- Enter the Selling Price.
- Enter the Cost per Unit.
- Select Calculate to get the margin percentage and profit per unit.
Related Calculations
Working from a target markup instead of a target margin? The Markup Calculator uses the related cost-based formula, or roll margin into a full P&L view with the E-commerce Profit Calculator.