Profit Margin Calculator
Calculate gross, operating, and net profit margins from revenue and cost data.
Your Results
Enter revenue and cost to calculate margins.
What This Calculator Does
This calculator computes gross profit, gross margin percentage, and markup percentage from revenue and cost data. It helps business owners, accountants, and analysts quickly assess profitability.
The Formula
Profit margin expresses profit as a percentage of revenue (selling price), while markup expresses profit as a percentage of cost. A 50% markup is only a 33.3% margin.
Step-by-Step Example
Enter revenue and cost
Input the selling price ($100) and cost ($60) of goods or services.
Calculate gross profit
Gross profit = $100 - $60 = $40.
Calculate margin
Margin = ($40 / $100) x 100 = 40%.
Calculate markup
Markup = ($40 / $60) x 100 = 66.7%.
Real-World Use Cases
Pricing Strategy
Determine if your prices generate sufficient margin to cover overhead and produce profit.
Product Comparison
Compare margins across products to focus on the most profitable items.
Financial Reporting
Quickly compute margins for monthly or quarterly financial summaries.
Common Mistakes to Avoid
Confusing margin with markup. A 50% margin means profit is half of revenue; a 50% markup means profit equals half of cost.
Using revenue for the markup denominator (it should be cost) or using cost for the margin denominator (it should be revenue).
Forgetting to include all costs (shipping, overhead, labor) in the cost figure, which overstates actual margins.
Frequently Asked Questions
Accuracy and Disclaimer
This calculator provides basic margin and markup calculations. Actual business profitability depends on many factors including overhead, taxes, and operating expenses not captured here.
Related Calculators
Tax Calculator
Estimate your federal income tax based on filing status, income, deductions, and tax brackets.
Use CalculatorFinance & AccountingVAT/GST Calculator
Calculate Value Added Tax or Goods & Services Tax amounts, add tax to or extract tax from a price.
Use CalculatorFinance & AccountingSalary to Hourly Converter
Convert annual salary to hourly rate accounting for hours per week and weeks per year.
Use Calculator