Instantly calculate your profit margin, markup percentage, and net profit. Essential tool for business owners, sellers, and entrepreneurs.
Profit margin is a financial metric that measures the percentage of revenue that a business retains as profit after accounting for costs. It is one of the most important indicators of a business's financial health and operational efficiency.
A higher profit margin means a company keeps more money for every rupee of sales, while a low margin suggests high costs or intense price competition. Businesses use profit margins to compare performance over time, benchmark against industry averages, and make pricing decisions.
These terms are often confused but represent very different things:
Markup is always higher than the corresponding profit margin for the same transaction. Retailers typically think in markup terms when pricing, but margins are used when reporting financial performance.
A "good" profit margin depends heavily on your industry. For retail, 5–10% is often considered healthy. For software companies, 20–30%+ is common. High-margin industries like pharmaceuticals or luxury goods often see 40–70%. Compare your margin to industry averages rather than an absolute number.
Gross profit margin only subtracts the direct cost of goods sold (COGS) from revenue. Net profit margin subtracts all expenses including COGS, operating costs, salaries, rent, taxes, and interest. Net margin is a more complete picture of profitability. Our calculator computes the gross profit margin from cost and selling price.
If you know your target profit margin, you can work backwards to find the selling price: Selling Price = Cost Price ÷ (1 − Target Margin). For example, if cost is ₹200 and you want a 30% margin: Selling Price = 200 ÷ 0.70 = ₹285.71.
Yes. A negative profit margin means you're selling below cost — a loss situation. This can occur during startup phases, heavy discounting, product clearance, or competitive pricing battles. Sustained negative margins are unsustainable and indicate a need to revise pricing or reduce costs.
No — they're different calculations often confused with each other. Markup is profit as a percentage of cost. Margin is profit as a percentage of selling price. For the same transaction, markup will always be a higher percentage than margin. See the formulas above for a clear comparison.