Profit Margin Calculator

How to use the Profit Margin Calculator

Calculate the share of sales revenue left after the cost you enter. Enter revenue and cost for the same product, order or reporting period, using one currency. The result includes profit in currency units and margin as a percentage of revenue.

Formula and worked example

Profit = revenue − cost; margin = profit ÷ revenue × 100.

For revenue of $200 and cost of $130, profit is $70. Dividing $70 by $200 gives 0.35, so the profit margin is 35%. This means each dollar of revenue leaves $0.35 after the included costs.

Interpretation and limitations

Revenue must be greater than zero. A negative margin means the entered cost exceeds revenue. The result is only as complete as your cost figure: using product cost alone gives a gross margin, while including all expenses gives a net margin. Exclude sales tax collected on behalf of authorities from revenue when comparing operating performance.

Profit margin questions

Is margin the same as markup?

No. On the same $200 sale and $130 cost, markup is $70 ÷ $130 × 100 = 53.85%. Margin uses revenue as the denominator; markup uses cost.

Why is margin undefined at zero revenue?

The formula divides by revenue. With no revenue there is no valid percentage margin, even when costs are also zero.

Can I average the margins of several products?

Use total profit divided by total revenue for the combined margin. A simple average can mislead when product sales volumes or prices differ.

Continue your calculation

Compare markup, find a selling price with the product pricing calculator, or include every expense with the net profit margin calculator.

Frequently asked questions

Is this calculator free?

Yes. It runs in your browser and does not require an account.

How should I use the result?

Use the result as a planning estimate and verify business-critical decisions against your source records.