How it works
The method behind the number.
Find profit and margin from revenue and cost. This tool explains the calculation so you can adjust the assumptions to match your situation.
Your formula appears here after the calculator loads.
Business
Profit margin calculator
Find profit and margin from revenue and cost.
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Profit margin calculator guide
What does this calculator help you figure out?
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. 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.
How is the result calculated?
Profit = revenue − cost. Profit margin (%) = profit ÷ revenue × 100. Markup (%) = profit ÷ cost × 100.
Worked example
Worked example: if revenue is $10,000 and cost is $6,500, profit is $10,000 − $6,500 = $3,500. Margin is $3,500 ÷ $10,000 × 100 = 35.0%. Markup 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.
Units and conversion notes
Revenue and cost must use the same currency and the same time or transaction basis. Do not compare monthly revenue with annual cost. Enter percentages as the calculator displays them; the page calculates the percentage from dollar amounts rather than asking you to enter a decimal margin.
Common mistakes to avoid
Good to know: name the cost definition before trusting the result. A product margin that excludes labor, shipping, overhead, returns, or fees may be useful for a quick comparison but is not the same as net business margin. Never call markup margin without checking the denominator.
Use the result for planning, then confirm taxes, fees, contract terms, and other business-specific assumptions.
Common questions
Frequently asked questions
How do I calculate profit margin?
Subtract cost from revenue to get profit, then divide profit by revenue and multiply by 100. Margin = (revenue − cost) ÷ revenue × 100.
What is the difference between margin and markup?
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 35.0% and markup is 53.8%.
What is a good profit margin?
There is no universal answer. A useful margin depends on the industry, product mix, overhead, taxes, financing, and the level of risk or service included.
Does profit margin include overhead and taxes?
Only if you include those costs in the cost input. This calculator does not decide whether a cost is gross, operating, or net; define the cost basis before using the result.
Can profit margin be negative?
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.
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