Profit margin calculator.
Enter cost and revenue. See gross profit, margin %, markup %, and what price you'd need to hit a target margin instead.
Per item
Defaults work for most small shops in the EU.
Gross margin %
How this calculator works (the same formula nouz uses)
Gross margin is the share of each sale that's left after the cost of the product itself. It's the first number every shop owner should know, because it sets the ceiling on everything else — rent, wages, and your own pay all come out of it.
Gross profit = revenue − costGross margin % = gross profit ÷ revenueMarkup % = gross profit ÷ costSuggested price for a target margin = cost ÷ (1 − target margin %)
The calculator runs both directions: give it a cost and a price and it tells you the margin you're getting; give it a target margin and it tells you the price you'd need to charge to reach it. That second direction is the useful one at the counter — you rarely start with a price you like, you start with a margin you need to protect.
A worked example
Using the defaults: a cost of €15 and a selling price of €25. Gross profit = €25 − €15 = €10. Gross margin = €10 ÷ €25 = 40%. The same €10 expressed against cost is a markup of €10 ÷ €15 = 66,7% — the margin and the markup are different numbers for the identical sale. Now flip it: to hit a 50% target margin on that €15 item, the suggested price is €15 ÷ (1 − 0,50) = €30. So moving from a 40% to a 50% margin means charging €30 instead of €25 — a €5 change on the shelf that adds €5 of pure profit to every unit, since the cost hasn't moved.
What a healthy number looks like
Healthy gross margin varies widely by what you sell, so treat these as rules of thumb, not fixed targets:
| Category | Typical gross margin |
|---|---|
| General retail | 40-60% |
| Apparel / fashion | 50-70% |
| Books | 30-45% |
| Cafe / food (on food cost) | 65-72% |
| Services | 60-90% |
Remember this is gross margin — before rent, wages, and fees. A 40% gross margin can still be a loss-making business if fixed costs eat the rest, which is why margin is the start of the analysis, not the end. What counts as healthy also depends on how fast the stock moves: a lower margin is fine on a fast seller and dangerous on something that lingers.
Common mistakes
- Confusing margin with markup. A 40% margin is a 67% markup; setting a 40% markup only gets you a 28,6% margin.
- Treating gross margin as profit. It's what's left before every fixed cost — not what you take home.
- Chasing revenue instead of margin euros. A €100 item at 60% margin earns €60; a €30 item at 70% margin earns just €21.
- Forgetting VAT. If your price includes tax, strip it out before computing margin, or the number is overstated.
When to use it — and what's next
Use it every time you price a new product, review a range, or negotiate a cost with a supplier — it's the baseline health check for any shop or boutique. Margin tells you the ceiling; to see which stock earns its keep, rank lines by return on inventory. Start with the markup calculator to price from cost, then the GMROI calculator to compare products. When you're ready to watch margin turn into real daily profit across the whole shop, that's nouz for retail.
Common questions
What's the formula for gross profit and gross margin?
Gross profit is revenue minus cost, and gross margin percent is gross profit divided by revenue. To work backwards to a price, use cost divided by one minus your target margin percent. The calculator runs both directions, so you can start from a price or from a target margin.
Can you show a worked example?
With the defaults, a 15 euro cost and a 25 euro price give 10 euros of gross profit. Margin is 10 divided by 25, which is 40%. To reach a 50% margin instead, the suggested price is 15 divided by one minus 0,50, which is 30 euros. So a higher margin means charging 30 rather than 25.
What is a healthy gross margin by category?
General retail typically runs 40-60%, apparel and fashion 50-70%, books 30-45%, and services 60-90%. For a cafe or restaurant, gross margin on food alone is usually 65-72%, which equals 100% minus your food cost percent. Treat these as rules of thumb rather than fixed targets.
Why does this calculator also show markup, not just margin?
Because margin and markup are not the same and people confuse them constantly. A 40% margin is a 67% markup, and a 50% margin is a 100% markup. If your supplier quotes prices in markup while your accountant talks margin, you will mismatch unless you can convert between them on the fly.
Is gross margin the same as my take-home profit?
No. Gross margin is what is left after only the product cost, before rent, wages, fees, and tax. A shop can post a healthy 40% gross margin and still lose money if fixed costs eat the rest. Gross margin is the ceiling on profit, not the profit itself.
Should I stock my highest-margin products or my highest-revenue ones?
Compare margin euros, because your top-margin items are not always your top-revenue items. A 100 euro item at 60% margin earns 60 euros, while a 30 euro item at 70% margin earns only 21 euros. Stock more of the first kind even if the price tag looks scarier.