A/B Price Test Sample Size Calculator
Calculate the minimum sample size needed for a statistically significant A/B price test. Set confidence level, power, and minimum detectable effect.
Margin Calculator
Calculate profit margin percentage from cost and selling price. Find gross margin, net margin, and equivalent markup for any product or service.
$
$
Margin
40.00%
Markup
66.67%
Cost⧉
$60.00
Selling Price⧉
$100.00
Profit per Unit⧉
$40.00
Revenue minus costs
Margin⧉
0.40%
% of selling price
Equivalent Markup⧉
0.67%
% of cost
Revenue to Profit⧉
$1 → $0.40
profit per dollar of revenue
Revenue Breakdown
Cost 60.0%
Margin 40.0%
Margin vs Markup Reference (at $100.00 price)
| Margin % | Markup % | Max Cost | Profit |
|---|---|---|---|
| 5% | 5.3% | $95.00 | $5.00 |
| 10% | 11.1% | $90.00 | $10.00 |
| 15% | 17.6% | $85.00 | $15.00 |
| 20% | 25.0% | $80.00 | $20.00 |
| 25% | 33.3% | $75.00 | $25.00 |
| 30% | 42.9% | $70.00 | $30.00 |
| 35% | 53.8% | $65.00 | $35.00 |
| 40% | 66.7% | $60.00 | $40.00 |
| 50% | 100.0% | $50.00 | $50.00 |
| 60% | 150.0% | $40.00 | $60.00 |
| 70% | 233.3% | $30.00 | $70.00 |
| 80% | 400.0% | $20.00 | $80.00 |
Planning notes, formulas, and examples
About the Margin Calculator
Profit margin measures the percentage of revenue that remains as profit after costs are deducted. Unlike markup, which is calculated on cost, margin is calculated on the selling price — making it the metric most commonly used in financial statements and business analysis. A 30% margin means 30 cents of every dollar in revenue is profit.
This calculator computes margin from cost and selling price, finds the selling price needed for a target margin, or determines the maximum cost you can afford at a given price and margin. It also displays the equivalent markup percentage, since businesses frequently need to switch between the two metrics.
Understanding margin is essential for evaluating business health, comparing profitability across products or services, and making informed pricing decisions. This calculator serves retailers, e-commerce sellers, consultants, and any business professional who needs to analyze or set profit margins.
Use the result to compare scenarios, test assumptions, and revisit the model when pricing, volume, or financing inputs change.
When This Page Helps
Margin is the standard profitability metric used in financial analysis, investor reporting, and business planning. This calculator converts between margin and markup, helping you avoid the common confusion between these two metrics. It also shows how different margin targets affect pricing decisions.
How to Use the Inputs
- Select your calculation mode: Find Margin %, Find Price for Target Margin, or Find Max Cost.
- Enter the known values (cost and price, or price and target margin).
- View the margin percentage, profit per unit, and equivalent markup.
- Compare your margin against industry benchmarks in the reference table.
- Use the margin comparison table to see how small changes affect profitability.
Formula used
Margin (%) = ((Selling Price − Cost) / Selling Price) × 100. Selling Price = Cost / (1 − Margin% / 100). Cost = Selling Price × (1 − Margin% / 100). Equivalent Markup (%) = Margin / (1 − Margin). Profit = Price − Cost.Example Calculation
Result: 40% margin, 66.67% markup, $40 profit
A product costing $60 and sold for $100 has a margin of ($100 − $60) / $100 × 100 = 40%. The equivalent markup is 40 / (100 − 40) = 66.67%. This means 40% of the selling price is profit, or equivalently, a 66.67% premium was added to the cost.
Tips & Best Practices
- Margin is always lower than markup for the same transaction — a 50% markup equals only a 33.3% margin.
- Track gross margin (before overhead) and net margin (after all expenses) separately.
- Healthy businesses typically have gross margins of 30–70% depending on the industry.
- If your margin is below 20%, review your cost structure and pricing strategy urgently.
- Consider volume when evaluating margin — low margin at high volume can be very profitable.
- Monitor margin trends over time; declining margins often signal rising costs or competitive pressure.
Understanding Margin in Business
Profit margin is the single most important metric for evaluating business profitability. While revenue shows how much money comes in, margin reveals how much you actually keep. Businesses with high revenue but low margins can be less profitable than smaller businesses with higher margins.
Margin vs Markup: The Critical Distinction
The most common mistake in business pricing is confusing margin with markup. A business owner targeting a "50% profit" who applies a 50% markup achieves only a 33.3% margin. To achieve a true 50% margin, a 100% markup is required. This calculator helps prevent this costly confusion by showing both metrics side by side.
Improving Your Margins
There are two fundamental ways to improve margin: increase prices or decrease costs. On the price side, consider value-based pricing, bundling, premium tiers, and reducing discounts. On the cost side, negotiate with suppliers, optimize operations, reduce waste, and improve efficiency. Even small improvements of 2–3 percentage points in margin can dramatically increase total profit.
Sources & Methodology
Last updated:
Frequently Asked Questions
Gross margin is calculated using only the direct cost of goods sold (COGS) and reflects production/purchase profitability. Net margin subtracts all expenses — overhead, marketing, taxes, interest — from revenue. A business might have a 60% gross margin but only a 10% net margin after accounting for all operating costs.
It depends on the industry. Software companies often have 70–90% gross margins. Retail clothing averages 40–60%. Grocery stores operate on 2–5% net margins. Service businesses typically aim for 15–25% net margin. Compare against your specific industry benchmarks rather than using universal standards.
Markup = Margin / (1 − Margin). For example, a 40% margin (0.40) converts to 0.40 / 0.60 = 0.6667, or 66.67% markup. This means if you want a 40% margin, you need to mark up your cost by 66.67%.
No. Margin is a percentage of selling price, so it can never exceed 100% (which would mean zero cost). Markup, however, can exceed 100% — a 200% markup means the selling price is 3x the cost, yielding a 66.67% margin.
Margin directly shows how much of each revenue dollar is profit, making it easy to compare profitability across companies of different sizes. A company with $10M revenue and 30% margin earns $3M profit. Markup requires knowing cost to interpret, making cross-company comparison harder.
Higher margins mean you need fewer sales to break even on fixed costs. If your fixed costs are $100,000/year and your margin is 40%, you need $250,000 in revenue to break even ($100,000 / 0.40). At 20% margin, you'd need $500,000 in revenue.
More in this topic
Break-Even Price Calculator
Calculate the minimum price needed to cover all costs. Enter fixed costs, variable costs, and expected sales volume to find your break-even price per unit and profitability at different price points.
Bundle Pricing Calculator
Calculate optimal bundle pricing with discount analysis. Enter individual product prices, set a bundle discount, and see revenue impact, perceived savings, and break-even volume increases.