Profit Margin Calculator
Calculate profit, profit margin, markup, and target selling price for your business — and understand the difference between margin and markup along the way.
This calculator provides mathematical estimates based on the costs, selling price, and assumptions you enter. Actual business profitability may differ after taxes, operating expenses, fees, overhead, returns, discounts, and other costs.
Profit margin vs. markup
The single most important distinction on this page — these are two different numbers, even for the exact same sale.
Profit Margin
40%
₱400 ÷ ₱1,000 (selling price)
Markup
66.67%
₱400 ÷ ₱600 (cost)
Profit margin measures profit as a percentage of the selling price, while markup measures the same profit as a percentage of the cost. They use the same ₱400 profit, but different denominators — so they're never the same number, except when profit is exactly ₱0.
| Metric | Formula | Example |
|---|---|---|
| Profit | Selling Price − Cost | ₱1,000 − ₱600 = ₱400 |
| Profit Margin | Profit ÷ Selling Price × 100 | ₱400 ÷ ₱1,000 × 100 = 40% |
| Markup | Profit ÷ Cost × 100 | ₱400 ÷ ₱600 × 100 = 66.67% |
How do I calculate a selling price from a target margin?
For a ₱600 cost and a 40% target margin, that's ₱600 ÷ (1 − 0.40) = ₱600 ÷ 0.60 = ₱1,000.
✗ Wrong: Cost × (1 + Target Margin)
₱600 × 1.40 = ₱840
Check the margin this actually produces: (₱840 − ₱600) ÷ ₱840 × 100 = 28.57% — not the 40% you asked for. This formula computes a 40% markup, not a 40% margin.
✓ Correct: Cost ÷ (1 − Target Margin)
₱600 ÷ (1 − 0.40) = ₱1,000
Check the margin: (₱1,000 − ₱600) ÷ ₱1,000 × 100 = 40% — exactly the target.
Examples
Small business product
Cost ₱600.00 · Selling price ₱1,000.00
Online seller
Cost ₱350.00 · Selling price ₱500.00
Pricing for a target margin
Cost ₱600.00 · Selling price ₱1,000.00
Selling below cost (loss)
Cost ₱1,000.00 · Selling price ₱800.00
Pricing for a target profit
Cost ₱350.00 · Selling price ₱500.00
Important information
Your product cost may not be your total cost
A product might really cost you: product cost + shipping + packaging + platform fees + payment fees + advertising + labor + other overhead. A 40% product margin does not necessarily mean your business has a 40% net profit margin — use the optional cost breakdown above to get closer to your real cost.
Gross profit vs. net profit
Gross profit is revenue minus direct costs (like the product itself). Net profit is revenue minus all applicable expenses — rent, salaries, marketing, fees, taxes, and more. They're rarely the same number.
What this calculator actually computes
With just a product cost and selling price, this gives you an estimated product or gross margin — not automatically your net profit margin. Add other costs using the optional breakdown to get a fuller picture.
Taxes and fees aren't included automatically
This calculator doesn't calculate VAT, percentage tax, or income tax. If platform or payment fees apply to your sale, add them using the optional cost breakdown so they're reflected in your margin.
Frequently asked questions
Profit margin is the percentage of your selling price that is actual profit, after subtracting your costs. It shows how much of every peso you charge ends up as profit.
Profit Margin = (Selling Price − Cost) ÷ Selling Price × 100. For example, something that costs ₱600 and sells for ₱1,000 has a margin of (₱1,000 − ₱600) ÷ ₱1,000 × 100 = 40%.
Margin measures profit as a percentage of your selling price; markup measures the same profit as a percentage of your cost. They use different denominators, so they're never the same number except at 0%. A ₱400 profit on a ₱600 cost is a 40% margin but a 66.67% markup.
Selling Price = Cost ÷ (1 − Target Margin). For a ₱600 cost and a 40% target margin, that's ₱600 ÷ (1 − 0.40) = ₱1,000 — not ₱600 × 1.40, which only gets you a 40% markup, not a 40% margin.
Yes. If you sell below your cost, your profit is negative and so is your margin — this is a loss, and the calculator labels it clearly rather than hiding it.
It means you're selling at exactly your cost — a break-even price. You're not losing money, but you're not making any profit on that sale either.
Only the costs you include. Entered with just a product cost, this gives you a gross/product margin, not a full net profit margin — see "Gross vs Net Profit" below.
No. Gross margin only subtracts direct costs (like the product itself); net margin subtracts all business expenses — rent, salaries, marketing, fees, taxes, and more. This calculator estimates a gross/product margin unless you add other costs yourself using the optional cost breakdown.
It varies significantly by industry, so there's no single universal target — a grocery store, a boutique, and a software business normally run very different margins. Research typical margins in your specific industry rather than aiming for a generic number.
Not unless you add them yourself using the optional additional costs (like platform or payment processing fees). It doesn't calculate VAT, percentage tax, or income tax.
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