Profit Margin Calculator

Profit Margin Calculator

Turn revenue and costs into profit, margin and cost ratio instantly.

UNDERSTAND THE ANSWER

How is this calculated?

Profit is what remains after subtracting the costs included in your estimate. Margin expresses that profit as a share of revenue.

Profit margin formulaProfit margin = (Revenue − Cost) ÷ Revenue × 100

A practical example

If revenue is $125,000 and costs are $80,000, profit is $45,000 and profit margin is 36%.

Assumptions, interpretation and common mistakes

Calculation assumptions

  • Revenue and costs cover the same reporting period.
  • Costs include only the expenses relevant to the margin being measured.
  • Returns, discounts and taxes are treated consistently in revenue.

How to interpret the result

  • A positive margin means revenue exceeds the entered costs.
  • Cost ratio plus profit margin equals 100% when profit is positive and inputs are consistent.
  • Compare margins across similar products and accounting definitions.

Common mistakes to avoid

  • Confusing margin with markup.
  • Mixing gross revenue with net costs from a different period.
  • Leaving fulfillment, payment or overhead costs out of a net-margin calculation.