Profit Margin Calculator — Gross Margin & Markup

Margin vs. markup — the pricing mistake that eats profits

Ask any small business owner: “If my cost is $100 and I sell for $150, what’s my margin?” The most common answer is “50%” — and it’s wrong. That’s 50% markup, but only 33.3% margin. Confusing the two is how a lot of contractors and shops accidentally lose money on jobs they thought were profitable.

Definitions

• Profit margin = Profit ÷ Revenue. Answers: “of every dollar I collect, how much is profit?”
• Markup = Profit ÷ Cost. Answers: “how much extra am I charging on top of my cost?”

Typical gross margins by industry (2026, US)

• Software / SaaS: 60-80%
• Professional services & consulting: 30-50%
• General contracting: 15-30%
• Retail (non-luxury): 5-20%
• Restaurants: 3-10%
• Grocery: 1-5%

These are gross margins (revenue minus direct cost of goods/services). Net margin — after overhead, taxes, and marketing — is usually 30-70% lower. Aim to be at or above your industry median.

Applying the number

Once you know the selling price that hits your target margin, use it as your line-item price in our invoice generator or send a formal quote. For hourly service work, feed the same numbers into our hourly rate calculator to translate margin into a per-hour rate.