— Everyday Math
Profit Percentage Calculator
Calculate profit percentage without mixing up markup and margin. Enter cost and price, or revenue and profit, choose the base for the headline figure, and see both profit on cost and profit on revenue clearly labelled.
Profit (% of cost)
25%
- Profit
- $20
- % of cost (markup)
- 25%
- % of revenue (margin)
- 20%
— How it works
Profit = selling price − cost. Profit % = profit ÷ base × 100, where the base is the cost (giving the markup) or the revenue (giving the gross margin).
What does “profit percentage” actually mean?
It depends who is asking. The profit in money is unambiguous — selling price minus cost — but turning it into a percentage requires a base, and there are two common choices. Measure the profit against the cost and you get the markup; measure it against the revenue (the selling price) and you get the gross margin. The same sale produces two different percentages, and people quote whichever flatters or whichever their trade uses, often without saying which. This calculator asks you to pick a base for the headline figure but always shows both, labelled, so a “profit %” can never quietly mislead.
Worked example — costs $80, sells for $100: Profit = $20. On cost that is $20 ÷ $80 = 25% (the markup); on revenue it is $20 ÷ $100 = 20% (the margin). Same $20 profit, two different “profit %” — which is why the base matters.
Markup or margin — and why cost-based is usually the bigger number
Because the cost is smaller than the selling price, dividing by it gives a larger percentage — so the markup is always at least as big as the margin for the same profit. A trader saying “I make 50% on that” almost always means a 50% markup (a 33.3% margin); a finance report quoting a “50% gross margin” means something quite different and more profitable. Retail and trades tend to talk in markup; accounting and investors talk in margin. Knowing which base a percentage uses is the difference between a healthy business and an underpriced one.
When you change the base under the advanced options, only the headline figure changes — the two labelled lines beneath always show the cost-based markup and the revenue-based margin side by side.
Working from revenue and profit
Sometimes you do not have the cost to hand but you do know the revenue and the profit — from a sales report, say. Switch “what you know” to “Revenue & profit” and enter those two; the calculator backs out the implied cost (revenue − profit) and gives the same profit percentages on both bases. Either way of entering the numbers lands on the same place: profit divided by your chosen base, with the alternative shown so the markup-versus-margin gap is always visible.
— Reader questions
How do I calculate profit percentage?
Work out the profit (selling price − cost), then divide by a base and multiply by 100. Dividing by the cost gives the markup; dividing by the revenue gives the gross margin. For $20 profit on an $80 cost / $100 price, that is 25% on cost or 20% on revenue.
Is profit percentage the same as margin or markup?
It can be either — that is the ambiguity. Profit as a percentage of cost is the markup; profit as a percentage of revenue is the gross margin. They are different numbers for the same profit, so always state the base. This calculator shows both.
Which base should I use, cost or revenue?
It depends on convention. Retail and the trades usually quote markup (on cost); accounting, finance and investors quote margin (on revenue). Pick the base your audience expects, but check both — a 50% markup is only a 33.3% margin.
Why is the profit percentage on cost larger than on revenue?
Because the cost is the smaller number, so dividing the same profit by it gives a bigger percentage. The markup (on cost) is therefore always at least as large as the margin (on revenue) for the same sale.
Can I enter revenue and profit instead of cost and price?
Yes. Switch “what you know” to “Revenue & profit” and the calculator works out the implied cost (revenue − profit) and the profit percentages on both bases.