Profit Margin Calculator
Calculate gross profit margin and markup from cost and price, or work backwards from your desired margin to find the right selling price.
Frequently Asked Questions
What is the difference between profit margin and markup?
Profit margin is calculated as a percentage of the selling price: Margin = (Price − Cost) ÷ Price × 100. Markup is calculated as a percentage of the cost: Markup = (Price − Cost) ÷ Cost × 100. If an item costs ₹100 and sells for ₹150, the gross margin is 33.3% and the markup is 50%. Margin is used in financial reporting and pricing strategy; markup is more common in retail procurement and trade contexts. Confusing the two can lead to significant under-pricing.
What is a good profit margin for a small business in India?
Margins vary widely by industry. Retail businesses typically operate on gross margins of 20–40%. IT consulting and service businesses can achieve 50–70% gross margins since their primary cost is time. Product-based manufacturing usually sees 15–30%. A net profit margin (after all operating expenses) of 10–20% is generally sustainable for a small Indian business, leaving room for reinvestment. Margins below 5% net leave little buffer for disruption or growth capital.
How do I price my services as a freelancer?
Begin with your cost base: target annual income plus business expenses (software, hardware, internet, taxes, insurance) divided by annual billable hours gives your floor rate. Then add at least 20–30% margin to cover non-billable time spent on sales calls, proposals, and skill development. Research prevailing market rates on Upwork, LinkedIn, and local IT communities for your specific skill set. Ultimately, your pricing should reflect the value you deliver — a well-implemented web solution that generates ₹5 lakh in business for a client justifies a far higher project fee than a simple cost-plus calculation would suggest.