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

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

COMMON QUESTIONS

Is this gross or net margin?

It depends on the costs you enter. Use cost of goods sold for gross margin, or all business expenses for net margin.

What is a good profit margin?

It varies widely by industry, business model and whether you are measuring gross, operating or net margin.

How do I calculate gross margin?

Subtract cost of goods sold from net revenue, divide by net revenue, then multiply by 100.

Can profit margin be negative?

Yes. A negative margin means the entered costs exceed revenue.

What is the difference between margin and markup?

Margin divides profit by selling price; markup divides profit by cost.

Should sales tax count as revenue?

Tax collected for a government is generally not business revenue. Use figures consistent with your accounting treatment.