Profit Margin Calculator
Calculate gross profit margin, net profit margin, markup percentage, and break-even point. Essential tool for business owners, freelancers, and students.
Profit (₹)
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Profit Margin
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Markup %
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Revenue Multiple
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How to Use & Understand This Calculator
Profit Margin and Markup are often confused, but they measure different things. Both are percentages based on the same profit figure, but calculated against different denominators — and this difference dramatically affects pricing strategy.
Profit Margin = Profit / Selling Price × 100. It represents what fraction of each rupee of revenue is profit. A 33% margin means ₹33 of every ₹100 in revenue is profit. This is the metric retailers and investors care about.
Markup = Profit / Cost Price × 100. It represents how much above cost you are charging. A 50% markup on a ₹500 item sets the price at ₹750. Markup is the metric manufacturers and wholesalers use for pricing.
The relationship: a 50% markup equals a 33.3% margin. A 100% markup (doubling the price) equals a 50% margin. Never confuse these — pricing at a "40% margin" vs "40% markup" gives you very different selling prices and profits. A ₹500 cost item at 40% margin sells for ₹833; at 40% markup it sells for only ₹700.
Renjith
Networking Technical Specialist at an MNC. Builds free tools to help students and professionals.
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It varies hugely by industry. Grocery retail: 2-5%. Software/SaaS: 60-80%. Restaurants: 3-9%. Consulting/freelancing: 30-60%. Always compare your margin against industry benchmarks. A 10% margin is excellent for retail but poor for software.
Gross margin = (Revenue - Cost of Goods Sold) / Revenue. Net margin = Net Income (after all expenses including tax, salaries, rent) / Revenue. Gross margin is always higher. A business can have a healthy gross margin but poor net margin if overheads are high.
Rearrange the margin formula: Selling Price = Cost / (1 - Target Margin). Example: To achieve a 40% margin on a ₹600 cost item, Selling Price = 600 / (1-0.40) = ₹1,000.
Selling certain products at or below cost (negative margin) to attract customers, who then buy other profitable items. Supermarkets sell milk cheaply knowing you'll buy other groceries. The loss leader must be offset by profitable companion sales.
Income tax and GST are not costs in the same sense. GST collected from customers is not your revenue — you hold it in trust for the government. Net profit margin is typically calculated after corporate income tax, which varies by business structure and income level.