Profit Margin Calculator

About the profit margin calculator tool

How to calculate profit margin from cost and selling price

1. 1

   Enter the cost price

   In 'Cost price' type what one unit costs you, including freight, packaging and any GST you cannot claim as credit.

2. 2

   Enter the selling price

   In 'Selling price' type the price before GST at which you sell one unit. Use the price after any discount you plan to give.

3. 3

   Read the margin

   The large figure is your profit margin as a percentage of selling price, with the markup on cost shown underneath.

4. 4

   Check the rupee profit

   The breakdown lists profit per unit along with the cost and selling price you entered, so you can multiply by expected volume.

5. 5

   Try alternatives

   Change the selling price to see how a ₹50 discount or a ₹100 price rise moves the margin before you commit it on a quotation.

The formula, with a worked example

• Profit per unit = Selling price − Cost price. For cost ₹800 and selling price ₹1,000: ₹200.
• Profit margin % = Profit ÷ Selling price × 100. ₹200 ÷ ₹1,000 × 100 = 20%.
• Markup % = Profit ÷ Cost price × 100. ₹200 ÷ ₹800 × 100 = 25%. The same ₹200 is a 20% margin but a 25% markup.
• Converting: Margin = Markup ÷ (1 + Markup). 25% markup ÷ 1.25 = 20% margin. Markup = Margin ÷ (1 − Margin). 20% ÷ 0.8 = 25% markup.
• Use prices before GST on both sides. GST collected on a sale is passed to the government and is not your profit; GST paid on purchases is usually claimed back as input credit.
• Gross margin ignores rent, salaries and marketing. Net margin subtracts those too; a 20% gross margin can be a 4% net margin after overheads.
• Marketplace check: a 20% gross margin with a 15% platform commission on selling price leaves only ₹50 on the ₹1,000 sale before shipping.
• If the selling price is below cost the margin is negative; the calculator shows this as a minus figure so loss-making SKUs stand out.

Who uses the profit margin calculator

Profit Margin Calculator: frequently asked questions

What is a good profit margin for a small business in India?

It depends on the trade. Grocery and FMCG retail run on 5% to 15% gross margins with high volume; apparel and footwear 40% to 60%; restaurants 60% to 70% on food cost; services and consulting 50% or more because cost of sales is low. Compare against your own overheads rather than a universal benchmark.

Is profit margin calculated on cost price or selling price?

On selling price. Margin tells you what fraction of each rupee of revenue is profit. Profit as a fraction of cost is called markup. Buying at ₹800 and selling at ₹1,000 gives a 20% margin (200 ÷ 1,000) and a 25% markup (200 ÷ 800).

Should I include GST when calculating margin?

No. Use the price before GST on both sides. GST you collect belongs to the government and GST you pay on purchases is generally recovered as input tax credit, so neither is profit or cost. The exception is GST you cannot claim, for example under the composition scheme, which then becomes part of your cost.

What is the difference between gross margin and net margin?

Gross margin only subtracts the direct cost of the goods or service sold. Net margin also subtracts rent, salaries, electricity, marketing, interest and tax. A retailer with a 20% gross margin and overheads equal to 16% of sales has a 4% net margin. This calculator gives gross margin per unit.

How do I calculate margin when I sell in bulk with a discount?

Enter the discounted per-unit selling price. If a ₹1,000 item is sold at 10% off, type ₹900 as the selling price against the ₹800 cost: the margin drops from 20% to 11.1%. Running the numbers this way before agreeing to a bulk deal shows whether the volume justifies the cut.