Profit Margin Calculator
Calculate profit margin percentage based on revenue and cost.
For informational purposes only, not professional financial or tax advice.
Profit Margin Calculator
Calculate gross profit, margin and markup
Margin% = ((Revenue - Cost) / Revenue) × 100 Markup% = ((Revenue - Cost) / Cost) × 100 Finance Note: A healthy profit margin varies by industry — retail averages 2–5%, SaaS averages 60–80%.
Profit margins and markups vary significantly by industry, market conditions, and business model. This calculator is for educational reference — perform thorough financial analysis before making pricing decisions.
Financial Disclaimer:
This tool is for informational and educational purposes only. It is not a substitute for professional financial, tax, or legal advice. Always consult a qualified professional regarding your specific financial situation.
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How to Calculate
Margin% = ((Revenue − Cost) ÷ Revenue) × 100
Gross Margin % = ((Revenue − Cost of Goods Sold) ÷ Revenue) × 100. Gross Profit = Revenue − Cost of Goods Sold. Net Margin % = (Net Income ÷ Revenue) × 100.
* Example: $100 revenue, $60 cost → 40% margin
Step-by-Step Manual Calculation Guide
Step 1: Subtract Cost of Goods Sold (COGS) from Total Revenue to get Gross Profit.
Step 2: Divide Gross Profit by Total Revenue.
Step 3: Multiply quotient by 100 to state Profit Margin percentage.
Real-World Industry Applications
Retail E-Commerce Pricing
Calculating a 40% gross profit margin on a product costing $60 sold for $100 (($100 − $60) ÷ $100 × 100 = 40%).
Corporate Income Statement Audit
Evaluating a business with $1,000,000 revenue and $150,000 net income (15% net profit margin).
SaaS Software Financials
Targeting high 80%+ gross margins characteristic of digital software companies.
Profit Margin Calculator Worked Examples
How it Works
The Profit Margin Calculator computes Gross Margin, Net Margin, and Gross Profit percentages from revenue and cost figures to evaluate business financial health.
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Frequently Asked Questions
How do I calculate profit margin percentage?
Subtract cost from revenue, divide by revenue, and multiply by 100. Example: ($100 revenue - $70 cost) / $100 revenue = 0.30 × 100 = 30% margin.
Why is profit margin never greater than 100%?
Because profit margin is calculated relative to revenue (selling price). Since cost cannot be negative, profit cannot exceed total revenue.
What is the difference between gross profit margin and net profit margin?
Gross profit margin subtracts only direct production costs (COGS). Net profit margin subtracts ALL operating costs, taxes, interest, and overhead.
What is a healthy profit margin for a small business?
Average healthy net profit margins range from 7% to 10%, though software companies often see 20%+ and retail grocery sees 2-3%.
How do I convert markup percentage into profit margin percentage?
Margin % = (Markup % ÷ (100 + Markup %)) × 100. A 100% markup equals a 50% profit margin.