Profit Margin Calculator
Calculate gross profit margin, net margin, and markup percentage for any product or business.
Calculate using…
Selling Price
₹1,000.00
Gross Profit
₹300.00
Profit Margin
30.00%
Markup %
42.86%
Margin vs Markup - Key Difference
Profit Margin
Profit as % of selling price
= Profit ÷ Revenue × 100
Markup
Profit as % of cost
= Profit ÷ Cost × 100
Same profit: 30.00% margin = 42.86% markup. Markup is always higher than margin for the same profit.
Typical industry profit margins
About the Profit Margin Calculator
Profit margin is the lens through which every business owner and investor should view a company's financial health. Gross margin tells you how efficient production is; net margin shows what actually hits the bottom line. A business can grow revenue rapidly but still collapse if margins are eroding. For small business owners in India, understanding margin vs markup is the first step to pricing products correctly and knowing which customers or products are actually profitable.
Profit Margin Formulas
Gross Margin % = (Revenue - COGS) / Revenue × 100 · Net Margin % = Net Profit / Revenue × 100 · Markup % = (Revenue - Cost) / Cost × 100
COGS = Cost of Goods Sold (direct materials + labor) · Gross profit = Revenue - COGS · Net profit = Revenue - all expenses (COGS + overhead + tax) · Markup ≠ Margin: 25% markup on ₹100 cost = ₹125 price = 20% margin
Worked Example
Clothing retailer: buys kurta for ₹300, sells for ₹700, overhead ₹150/unit
Gross profit = ₹400 · Gross margin = 57.1% · Net profit = ₹250 · Net margin = 35.7% · Markup on cost = 133%
Tips & Insights
- 1
Most Indian retail businesses have gross margins of 20-50%; e-commerce typically needs 40%+ to survive after platform fees.
- 2
A 10% discount on a product with 25% margin eliminates 40% of your profit - discounting kills margins fast.
- 3
Benchmark your margins against industry averages: grocery retail 2-5%, software 70-80%, restaurants 5-15%.
- 4
Focus on net margin, not revenue. A ₹10 crore business with 2% net margin earns less than a ₹2 crore business with 15% net margin.
- 5
GST-registered businesses: ensure all margin calculations use the ex-GST price as the revenue base.
Why this matters for you
India has over 6 crore small businesses, most of which do not formally track profit margins. A sweet shop owner who charges ₹40 for mithai costing ₹28 to make might think they have a 42% margin - but when rent, staff, electricity, and wastage are included, the true net margin may be under 5%. Knowing your actual margin is the difference between a thriving business and working hard for nothing.
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