Quick Answer
Profit or loss is calculated as Selling Price minus Cost Price. Profit percentage (on cost) equals (Profit ÷ Cost) × 100, while gross margin (on selling price) equals (Profit ÷ Selling Price) × 100, these two percentages are always different for the same transaction.
What Is Profit & Loss?
A profit and loss calculator finds how much money you made or lost on a sale, and expresses that result as a percentage in two different, and commonly confused, ways: markup (profit as a percentage of what something cost you) and gross margin (profit as a percentage of what you sold it for).
These two numbers are never equal except when profit is zero. If you buy something for 100 and sell it for 130, your profit is 30. Markup is 30 ÷ 100 = 30%. Margin is 30 ÷ 130 = 23.08%. Markup will always be a larger percentage than margin whenever there's a profit, because it's measured against the smaller base (cost) rather than the larger one (selling price).
This distinction trips up a lot of business owners when pricing products: aiming for a '30% margin' and pricing with a '30% markup' produce two completely different selling prices and profit outcomes. Knowing which one you're actually targeting matters for accurate pricing and financial planning.
How to Use
- 1Enter the cost price, what you paid to buy or produce the item.
- 2Enter the selling price, what you sold or plan to sell it for.
- 3The calculator instantly shows your profit or loss, profit percentage, gross margin, and markup.
Formula
P/L = Selling Price − Cost PriceMarkup % = (Profit ÷ Cost Price) × 100Margin % = (Profit ÷ Selling Price) × 100Example: Cost price 1,000, selling price 1,300
- Profit = 1,300 − 1,000 = 300
- Markup % = 300 ÷ 1,000 × 100 = 30%
- Gross Margin % = 300 ÷ 1,300 × 100 ≈ 23.08%
Tips & Things to Know
- Markup and gross margin answer different questions: markup tells you how much you added on top of cost; margin tells you what share of your revenue is actual profit. Know which one your business decisions depend on.
- A common pricing mistake is setting a target margin (say 30%) but calculating the price using a markup formula instead, this under-prices the product and delivers a lower margin than intended.
- A loss shows as a negative profit, the calculator still reports magnitude and percentage so you can see exactly how far below cost the sale was.
- For businesses, gross margin is usually the more meaningful figure since it's measured against revenue, the number on your income statement, rather than against cost.
- Always price using the same cost basis (including relevant overhead if applicable), comparing margins calculated on different cost definitions gives misleading results.