Profit Margin Calculator
Calculate gross profit margin, markup percentage, and profit amount from cost price and selling price. Switch between margin and markup instantly. Free, no sign-up.
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Calculates margin, markup, and profit instantly.
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Profit margin questions answered
Profit margin (or gross margin) is profit expressed as a percentage of selling price. Gross Margin % = (Selling Price − Cost Price) ÷ Selling Price × 100. For example, if you sell at AED 100 and cost is AED 60, margin = 40%.
Markup is profit expressed as a percentage of cost price. Markup % = (Selling Price − Cost Price) ÷ Cost Price × 100. Using the same example: markup = AED 40 ÷ AED 60 × 100 = 66.7%. Note: 40% margin is not the same as 40% markup.
Margin is profit as a % of selling price. Markup is profit as a % of cost. A 50% markup gives a 33.3% margin. A 50% margin requires a 100% markup. Most retailers think in margin; manufacturers often think in markup.
It depends on the industry. Retail typically targets 20–50% gross margin. Software/SaaS aims for 60–80%. Food and restaurants operate at 60–70% gross margin but lower net margin after overheads. Service businesses often target 40–60%.
Use the formula: Selling Price = Cost ÷ (1 − Desired Margin%). For a 40% margin on a product costing AED 60: Selling Price = 60 ÷ 0.6 = AED 100. This ensures you hit your target margin.
Gross margin is revenue minus cost of goods sold (COGS). Net margin is revenue minus all expenses — COGS, salaries, rent, marketing, taxes. Net margin is what the business actually keeps.
UAE VAT (5%) is charged to the customer and passed to the government — it should not affect your margin directly. However, input VAT on your purchases reduces your net VAT liability. Always calculate margin on pre-VAT prices.
Service businesses and agencies typically target gross margins of 40–65% on project revenue. This covers salaries, overheads, and leaves profit for reinvestment. Below 30% is a warning sign for service businesses.