Free Business Calculator
Profit Margin Calculator
Calculate your profit, profit margin, and markup instantly using your revenue and total costs.
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Enter your total revenue and total cost to calculate profit, profit margin and markup.
Total sales or revenue generated.
Total cost associated with generating the revenue.
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What is profit margin?
Profit margin shows how much of your revenue remains as profit after costs are deducted. It is usually expressed as a percentage and is one of the most common ways to measure the profitability of a business.
A higher profit margin means a larger percentage of your revenue remains after covering costs. Businesses can use profit margin to compare products, pricing strategies, and overall performance.
How to calculate profit margin
First, subtract your total costs from your revenue to calculate profit. Then divide the profit by revenue and multiply the result by 100.
Profit = Revenue − Cost
Profit Margin (%) = Profit ÷ Revenue × 100
Profit margin example
Suppose your business generates $10,000 in revenue and your total costs are $6,000. Your profit is $4,000.
Revenue: $10,000
Cost: $6,000
Profit: $4,000
Profit Margin: 40%
Profit margin vs. markup
Profit margin and markup are related, but they measure different things. Profit margin compares profit with revenue, while markup compares profit with cost.
For example, if a product costs $60 and sells for $100, the profit is $40. The profit margin is 40%, while the markup is approximately 66.67%.
Frequently Asked Questions
What is a good profit margin?
A good profit margin varies significantly by industry, business model, operating expenses, and company size. Compare your margin with similar businesses and your own historical performance.
What is the difference between profit and profit margin?
Profit is the dollar amount remaining after costs are subtracted from revenue. Profit margin expresses that profit as a percentage of revenue.
Can profit margin be negative?
Yes. If your costs are greater than your revenue, your profit and profit margin will be negative, indicating a loss.