Profit Margin Calculator
Calculate gross profit, profit margin and markup from revenue and cost.
Profit Margin Calculator
Calculate gross profit, profit margin and markup from revenue and cost.
How to use the Profit Margin Calculator
- Enter total revenue.
- Enter total cost.
- Click Calculate.
Formula
Profit = Revenue − Cost
Margin% = Profit / Revenue × 100
Markup% = Profit / Cost × 100
Example
Revenue $10,000, cost $6,500: Profit = $3,500. Margin = 35%. Markup = 53.85%.
Step-by-step calculation
- Profit: $10,000 − $6,500 = $3,500.
- Margin: $3,500 ÷ $10,000 = 35%.
- Markup: $3,500 ÷ $6,500 = 53.85%.
Real-world uses
- Business financial analysis.
- Comparing product profitability.
- Setting pricing targets.
Common mistakes
- Confusing profit margin with markup percentage.
- Using cost instead of revenue for margin calculation.
- Ignoring operating expenses when calculating gross margin.
Frequently asked questions
Is this gross or net margin?
This calculates gross margin. Net margin requires subtracting operating expenses, taxes and interest.
What is a healthy profit margin?
This varies by industry. Retail typically targets 2-10%, software 15-30%, services 10-25%.
Can margin be negative?
Yes. If cost exceeds revenue, the margin is negative, indicating a loss.