Profit Margin Calculator
Find profit, margin and markup from revenue and cost.
Results update as you type.
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How it works
Profit margin is the share of each sale you keep as profit after covering the cost of what you sold, expressed as a percentage of the selling price. That percentage matters more than the raw dollar profit because it reveals how efficiently a product turns revenue into earnings and lets you compare items priced very differently on equal terms. This profit margin calculator takes revenue minus cost to find the profit, divides by revenue to give the margin, and also divides by cost to give the markup — the same profit viewed from two angles. Margin is measured against the selling price because that is the money actually flowing in, which is the convention accountants and investors use when they judge a business's health. Because the selling price is always larger than the cost, the profit margin calculator will show a margin that is lower than the markup for the identical sale, the exact reason the two figures are so often confused. Retailers, wholesalers, freelancers and e-commerce sellers use a profit margin calculator to set prices, screen which products are worth stocking, and benchmark themselves against competitors. Whether the result is a gross or net margin depends on the cost you enter — cost of goods alone gives gross margin, while all-in costs give net.
Margin = (revenue − cost) ÷ revenue × 100 · Markup = (revenue − cost) ÷ cost × 100
Revenue minus cost isolates the profit on the sale. Margin divides that profit by revenue, so it answers how much of every sales dollar you keep, which is why the denominator is the selling price. Markup instead divides the same profit by cost, answering how much you added on top of what you paid. Multiplying by 100 makes each a percentage. The shared numerator over different denominators is why margin is always the smaller figure.
Source:Standard financial formula
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter revenue (selling price) and cost.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Profit margin updates instantly as you type — no button to press.
Frequently asked questions
What is a good profit margin?
It varies enormously by industry, so judge yours against direct peers rather than a single benchmark. Grocery and other retail often survive on net margins in the low single digits, restaurants sit around 3–9%, while software and consulting can exceed 20% or more. As a rough guide across small businesses, a 10% net margin is considered healthy and 20% is strong. What counts is a margin that covers all costs and still funds growth.
What is the difference between margin and markup?
Both start from the same profit, but they use different denominators. Margin divides profit by the selling price and tells you what fraction of revenue you keep. Markup divides profit by the cost and tells you how much you added over what you paid. For a profitable sale markup is always the larger percentage. A 40% margin equals a roughly 67% markup on the same item, so never quote one thinking it is the other.
Is this gross or net profit margin?
That depends on the cost you enter. If you use only the cost of goods sold — materials and direct production — the result is gross margin. If you enter all costs, including overhead, marketing, shipping and fees, you get something closer to net margin. Gross margin shows product-level profitability; net margin shows what the business actually keeps after every expense. Be consistent about which costs you include when comparing products.
How do I increase my profit margin?
Two levers move it: raise the price or lower the cost. Modest price increases often lift margin more than chasing volume, provided demand holds. On the cost side, negotiate with suppliers, cut waste, or find cheaper inputs without hurting quality. Dropping low-margin products and focusing on high-margin ones also raises the blended figure. Track margin per product, not just overall, so you know which items are actually carrying the business.
Can margin ever be negative?
Yes. If your cost exceeds the selling price, the profit is negative and so is the margin, meaning you lose money on every unit sold. This happens with clearance items priced below cost, mispriced products, or when unexpected costs erode a thin margin. A negative margin is a clear signal to raise the price, reduce the cost, or discontinue the product, unless you are deliberately selling at a loss to attract customers.