Profit Margin Calculator

Profit margin is profit as a percentage of the selling price. It tells you how much of every sale you keep after the cost of the goods.

  • Last updated
  • Formula tested against reference values

Your numbers

Result

Profit margin
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Calculating…

Gross profit
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Markup on cost
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How to use this calculator

  1. Enter or choose revenue (selling price).
  2. Enter or choose cost.
  3. The profit margin updates as you type. Use Copy result or Share to keep it.

Formula

Margin=Revenue−CostRevenue×100

Margin % = (Revenue − Cost) ÷ Revenue × 100

Revenue
the selling price or sales
Cost
the cost of the goods sold

Worked example

  1. Profit = 200 − 150 = 50.
  2. Margin = 50 ÷ 200 × 100 = 25%.
  3. Markup = 50 ÷ 150 × 100 = 33.33%.

A $200 sale costing $150 has a 25% margin, which is a 33.33% markup.

What the result means

Margin is divided by the price, markup by the cost, so for the same sale the markup is always the larger number. A margin can never reach 100%, while a markup can.

Assumptions and limits

  • “Cost” means the direct cost of what was sold, giving gross margin.
  • For net margin, include operating costs, interest and taxes in “Cost”.

Questions

What is a good profit margin?

It varies widely by industry: grocery retail often runs on low single-digit net margins, while software can have gross margins well above 70%.

How do I get a target margin?

Price = Cost ÷ (1 − target margin). For a 40% margin on a cost of 60, price = 60 ÷ 0.6 = 100.