Profit margin calculator

Enter a price and a cost to see the margin, or start from the margin you need and solve for the price — with platform and payment fees included.

I know my…

Currency

Values are not converted. Change the currency before entering the numbers.

For a digital product this is often zero. If it is, use “From margin”; markup is undefined when there is no cost.

The margin is the profit left after the cost and the selling fees, divided by the price.

Include selling fees

Platform and payment fees, deducted from the sale price.

Selling price

After fees

£12.50

Profit before fees
£7.50
Selling fees
£0.00
Profit after fees
£7.50
Margin after fees
60.0%
Markup after fees
150.0%

The arithmetic

price = (£5.00 + £0.00) ÷ (1 − 0% − 60%)

Margin is profit divided by price; markup is profit divided by cost. The same sale has different numbers for each.

Fees are off. For a digital product, turn them on: the platform and payment fee is usually the largest per-sale cost. A 10% fee on a £20 sale is £2 before the payment fee, which is 10 points of margin.

Markup and margin are not the same: a 50% markup is a 33.3% margin, and a 60% margin is a 150.0% markup.

What profit margin means

Profit margin is the share of the sale price that is left after the cost. The formula is margin = (price − cost) ÷ price × 100. A £25 sale with a £10 cost leaves £15, which is a 60% margin. The markup on the same sale is 150%, because the £15 profit is 150% of the £10 cost.

The calculator shows both. That is deliberate: most pricing arguments go wrong because one person is talking about margin and the other is talking about markup, and both think they mean the same number.

The same £25 sale

  • Cost: £10.00
  • Profit: £15.00
  • Margin: 60.0%
  • Markup: 150.0%

Find the price that hits your target margin

If you know the margin you need, the price is cost ÷ (1 − margin ÷ 100). A £10 cost at a 50% target gives £20. Add selling fees and the formula becomes (cost + fixed fee) ÷ (1 − fee% − margin%).

A worked example: a £5 cost, a 10% platform fee and a 70% target margin. The price is £5 ÷ (1 − 0.10 − 0.70) = £25.00. The platform fee is £2.50, the profit is £17.50 and the margin is 70%. The calculator rounds the price up to the cent and nudges it if the rounded fee leaves the margin a penny short.

At a glance

  • Price: £25.00
  • Platform fee: £2.50
  • Profit: £17.50
  • Margin: 70.0%

Margin for digital products

A digital product can have a very high gross margin because there is no per-unit cost to make the next copy. That is real, but it is not the whole story. The costs that remain are the platform fee, the payment fee, refunds, support and the cost of getting the buyer to the page. On a £20 sale, a 10% platform fee and a 2.9% + 30¢ payment fee take about £2.88 before you have paid for a single ad.

The margin that matters is the one after those costs, not the 100% gross margin in a spreadsheet. This is why the calculator has a fee toggle: it turns the attractive gross margin into the number that actually reaches you.

What a good margin looks like

The honest answer is that it depends on the buyer and the alternative. A consumer product competing with free content has a different ceiling from a business tool competing with an hour of someone’s time. The same file can be a £9 impulse buy for one audience and a £99 time-saver for another.

Use the margin as a constraint, not a target someone else can set. Decide what the product is worth to the buyer, then check whether the price that produces it leaves a margin you can live with after fees and acquisition. If it does not, the answer is usually a different buyer or a different product, not a smaller margin.

The pricing judgement is covered in how to price a digital product; this page is the arithmetic underneath it.

Common margin mistakes

  • Using revenue instead of profit. A £100 sale is not a £100 margin; the cost and the fees come out first.
  • Comparing gross and net. A 100% gross margin and a 60% net margin can describe the same product at different stages.
  • Ignoring the fee stack. A 10% platform fee and a 2.9% + 30¢ payment fee are not a rounding error on a £20 sale.
  • Setting a margin target without a price test. The margin is an output of the price the buyer will pay; it is not a number you can declare independently.
  • Assuming a projection is a fact. A margin calculated on expected sales is a plan, not a result.

Related calculators and guides

Use the markup calculator when you know the markup rather than the margin, the creator fee calculator to see what a platform takes, or the Stripe vs PayPal comparison to check the payment fee. The pricing judgement is in how to price a digital product.

Frequently asked questions

What is profit margin?
Profit margin is profit divided by revenue, shown as a percentage. If a product sells for £25 and the cost is £10, the profit is £15 and the margin is 60%. It answers “of every pound that comes in, how much is left?”
What is the difference between gross and net margin?
Gross margin subtracts the direct cost of the product. Net margin subtracts everything else too: platform fees, payment fees, ads, refunds, support and tax. A digital product can have a 100% gross margin and a much lower net margin once acquisition and fees are counted. The calculator can include selling fees, but not ad spend or tax.
How do I calculate margin from price and cost?
Margin = (price − cost) ÷ price × 100. A £25 price with a £10 cost gives (£25 − £10) ÷ £25 = 60%. The “From price” tab does this and also shows the markup, which is profit divided by cost.
How do I find the price for a target margin?
Price = cost ÷ (1 − margin ÷ 100). For a £10 cost and a 50% target, the price is £20. If selling fees apply, the formula becomes price = (cost + fixed fee) ÷ (1 − fee% − margin%). The calculator solves either version and rounds up to the cent.
What is a good profit margin for a digital product?
There is no universal number. Digital products often have high gross margins because there is no per-unit manufacturing cost, but the margin that matters is after acquisition and fees. A product sold to businesses at a higher price can carry a higher margin than the same file sold to consumers. Use the range as a starting point, not a target someone else can set for you.
Why does a 50% markup produce a 33.3% margin?
Markup divides profit by cost; margin divides profit by price. A £10 cost with a 50% markup sells for £15. The £5 profit is 50% of the £10 cost, but only 33.3% of the £15 price. The markup page has the full conversion table.
How do platform and payment fees affect the margin?
They reduce the profit without reducing the price. A 10% platform fee on a £25 sale is £2.50; a 2.9% + 30¢ payment fee is about £1.03. Together they take more than £3.50 of the £15 profit in the example above. Turn on “Include selling fees” to see the after-fee margin and solve for a price that hits the target.
What happens when the cost is zero?
If the cost is zero and there is no fixed fee, the margin is 100% at any price before fees. With a 10% selling fee, the margin is 90% at any price; a target below 90% is already met and a target above 90% is impossible. The calculator says so instead of returning a meaningless price of zero.
Does the calculator include VAT or sales tax?
No. Tax depends on the seller’s registration, the buyer’s location and the product. It is not folded into the margin. The calculator is arithmetic, not tax advice.
Can I use this for a service business?
Yes, if the cost includes the direct cost of delivering the work, including your time if you want to count it. The arithmetic is the same. The judgement about what counts as cost is yours.
What is the difference between margin and markup?
Margin is profit divided by price; markup is profit divided by cost. The same sale has two different percentages. If you need a 60% margin, the markup is 150%; if you apply a 60% markup, the margin is 37.5%. The two pages cross-link so you can use the one that matches the number you know.

Sources

This is arithmetic, not tax or accounting advice. Fees change; check the platform’s own pricing page before you rely on a rate.