Business
Find profit and margin from revenue and cost, with an optional target-margin price scenario.
Enter your numbers to see the answer.
Profit margin calculator guide
Profit margin shows how much of a sale remains as profit after the stated cost is removed. This calculator starts with revenue and cost, subtracts cost from revenue to find profit, then divides profit by revenue to express the result as a percentage. It also shows markup on cost so you can see why two businesses can describe the same sale with different percentages, and an optional target-margin field returns the price you would need to charge to hit a chosen margin on the same cost. Use revenue as the selling amount received and cost as the expense basis you intend to compare. For a simple product estimate, cost may mean purchase or production cost. For a business decision, decide whether you are measuring gross margin, operating margin, or net margin before entering numbers; rent, payroll, shipping, taxes, and payment fees may belong in different versions of the calculation. A positive margin does not automatically mean positive cash flow, and a negative margin signals that the stated cost exceeds revenue.
Profit = revenue − cost. Profit margin (%) = profit ÷ revenue × 100. Markup (%) = profit ÷ cost × 100. Price at target margin = cost ÷ (1 − target margin ÷ 100).
Worked example with the defaults: revenue is $10,000 and cost is $6,500, so profit is $10,000 − $6,500 = $3,500. Margin is $3,500 ÷ $10,000 × 100 = 35%, which is the figure the calculator displays. Markup on cost is $3,500 ÷ $6,500 × 100 = 53.8%. Both percentages describe the same $3,500 profit, but margin uses revenue as its base while markup uses cost. If you entered a 40% target margin, the target price row would show $6,500 ÷ (1 − 0.40) = $10,833.33, the revenue needed to earn 40% on the same cost.
Revenue and cost must use the same currency and the same time or transaction basis. Do not compare monthly revenue with annual cost. Enter the target margin as a whole percentage such as 40, not 0.40; it is capped at 99.9% because a 100% margin would require zero cost. The page calculates percentages from currency amounts rather than asking you to enter a decimal margin.
The result is a planning figure that depends entirely on the assumptions you entered. Fees, taxes, payment timing, and rate changes are not captured unless you built them into the inputs, and small errors in a rate compound quickly over time. Verify the rates and terms against your own agreements or your accountant before making a commitment. On this page the figure rests entirely on revenue, cost and target margin, so start there if the profit margin calculator returns something you did not expect.
Name the cost definition before trusting the result. A product margin that excludes labor, shipping, overhead, returns, payment-processing fees, or sales tax may be useful for a quick comparison but is not the same as net business margin, which is often 5–15 percentage points lower. Never call markup “margin” without checking the denominator; a 53.8% markup and a 35% margin are the same sale. Do not enter revenue net of tax in one place and gross of tax in another, and remember that a target-margin price is a pricing scenario, not evidence the market will pay it.
Use the result for planning, then confirm taxes, fees, contract terms, and other business-specific assumptions. This is not accounting, tax, or investment advice.
How it works
Find profit and margin from revenue and cost, with an optional target-margin price scenario. This tool explains the calculation so you can adjust the assumptions to match your situation.
Worked example
With Revenue = 10000 $ · Cost = 6500 $ · Target margin = 0 % → 35 % margin (profit margin). Change an input above and this example updates with your numbers.
Common questions
Subtract cost from revenue to get profit, then divide profit by revenue and multiply by 100. Margin = (revenue − cost) ÷ revenue × 100, so $10,000 revenue and $6,500 cost give a 35% margin.
Margin divides profit by selling revenue. Markup divides profit by cost. With $3,500 profit on $10,000 revenue and $6,500 cost, margin is 35% and markup is 53.8%; markup is always the larger number for a profitable sale.
There is no universal answer. Grocery retail often runs on gross margins under 30%, while software can exceed 70%. A useful margin depends on the industry, product mix, overhead, taxes, financing, and the level of risk or service included, so compare with businesses like yours.
Only if you include those costs in the cost input. This calculator does not decide whether a cost is gross, operating, or net, and it excludes income tax, payment fees, and shipping unless you add them; define the cost basis before using the result.
Yes. If cost is greater than revenue, profit and margin are negative. That indicates the stated sale loses money before any costs you left out, so selling $6,500 of stock for $6,000 shows a margin of −8.3%.