How to calculate profit margin (and not confuse it with markup)
✓ Verified in LibreOffice 25.8.7.3Work out margin from cost and price — and keep margin and markup straight.
The formula
| App | Formula | Notes |
|---|---|---|
| Excel | =(B2-A2)/B2 | A2=cost, B2=price. MARGIN divides by price; markup is =(B2-A2)/A2 (divides by cost). |
| Google Sheets | =(B2-A2)/B2 | Identical. |
| LibreOffice Calc | =(B2-A2)/B2 | Identical. |
How it works
Margin is profit as a share of the PRICE: ($80−$60)/$80 = 25%. Markup is the same profit as a share of the COST: $20/$60 = 33.3%. Same sale, different numbers — mixing them up is how products get underpriced. Going the other way: to hit a target margin m, price = cost/(1−m); a 25% margin on $60 cost means 60/0.75 = $80. Format the result as a percentage.
Verified, not just documented
We ran =(B2-A2)/B2 in LibreOffice 25.8.7.3 (headless, with forced recalculation) and it returned 0.25 — exactly the expected result. Every formula here is confirmed by actually executing it.