Profit Margin Calculator
This calculator helps you make smarter pricing decisions for your business. Enter your costs and experiment with different markups to see how they affect your profit margin. Hover over any field for detailed explanations and examples.
Hover or click on the info icons for help.
Fill in any 2 fields (Cost, Revenue, or Profit) and adjust the margin % to calculate the third.
Include Overhead Costs
Including overhead helps ensure your pricing covers all business expenses.
Overhead creates a minimum markup threshold to maintain profitability.
Overhead Calculator
Your total annual business revenue from all projects and services.
Your total annual business expenses not directly tied to specific projects
(rent, insurance, utilities, office staff, etc).
Overhead: 20.0% of Revenue
Minimum Markup: 1.20x
Cost: What you pay for materials and labor.
Example:
Materials: $700
Labor: $300
= $1,000 total cost
💡 Tip: Start with cost - it's your foundation for pricing!
Example:
Materials: $700
Labor: $300
= $1,000 total cost
💡 Tip: Start with cost - it's your foundation for pricing!
Revenue: What your customer pays you.
Key Concept:
Cost × Markup = Revenue
Example:
Cost: $1,000
• 1.5x markup → $1,500 revenue
• 2.0x markup → $2,000 revenue
💡 Tip: Revenue must cover both cost AND desired profit!
Key Concept:
Cost × Markup = Revenue
Example:
Cost: $1,000
• 1.5x markup → $1,500 revenue
• 2.0x markup → $2,000 revenue
💡 Tip: Revenue must cover both cost AND desired profit!
Gross Profit: Revenue minus direct costs.
Key Formula:
Revenue - Cost = Gross Profit
Example:
Revenue: $2,000
Cost: $1,000
= $1,000 gross profit
💡 Tip: This is before accounting for overhead!
Key Formula:
Revenue - Cost = Gross Profit
Example:
Revenue: $2,000
Cost: $1,000
= $1,000 gross profit
💡 Tip: This is before accounting for overhead!
Net Profit: What you actually keep after all costs.
Key Formula:
Gross Profit - Overhead = Net Profit
Example:
Gross Profit: $1,000
Overhead: $200
= $800 net profit
💡 Tip: This is your true profit after all expenses!
Key Formula:
Gross Profit - Overhead = Net Profit
Example:
Gross Profit: $1,000
Overhead: $200
= $800 net profit
💡 Tip: This is your true profit after all expenses!
Markup: How many times higher than cost.
Understanding Markup:
1.0x = Break even (no profit)
1.5x = Selling for 150% of cost
2.0x = Doubled your cost
Example:
Cost: $1,000 × 2.0x markup
= $2,000 revenue
= 50% margin
💡 Tip: Markup of 2.0x always gives 50% margin!
Understanding Markup:
1.0x = Break even (no profit)
1.5x = Selling for 150% of cost
2.0x = Doubled your cost
Example:
Cost: $1,000 × 2.0x markup
= $2,000 revenue
= 50% margin
💡 Tip: Markup of 2.0x always gives 50% margin!
Margin: Profit as % of revenue.
Understanding Margins:
• 20% margin needs 1.25x markup
• 33% margin needs 1.5x markup
• 50% margin needs 2.0x markup
• 60% margin needs 2.5x markup
💡 Key Insight: To get a 50% margin,
you need to double your cost (2.0x markup)!
Understanding Margins:
• 20% margin needs 1.25x markup
• 33% margin needs 1.5x markup
• 50% margin needs 2.0x markup
• 60% margin needs 2.5x markup
💡 Key Insight: To get a 50% margin,
you need to double your cost (2.0x markup)!
Project Summary
For a project costing $1000.00, charge your customer $1500.00. This gives you a profit of $500.00 using a 1.50x multiplier, resulting in a 33.3% margin.
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