How to Calculate Profit Margin
Subtract costs from revenue to find profit. Divide profit by revenue and multiply by 100 to express the margin as a percentage.
Profit = Revenue − Costs
Profit margin = (Profit ÷ Revenue) × 100
Example: $1,000 Revenue and $700 Costs
Profit: $1,000 − $700 = $300.00
Profit margin: ($300 ÷ $1,000) × 100 = 30.00%
In this example, 30 cents of every dollar of revenue remains after the entered costs.
Common Profit Margin Questions
What is the difference between margin and markup?
Margin divides profit by revenue. Markup divides profit by cost. For example, an item costing $60 and selling for $100 has a $40 profit, a 40% margin, and approximately a 66.67% markup.
Does this calculate gross or net margin?
That depends on the costs included. Using the cost of goods sold gives a gross margin calculation. Using all applicable expenses gives a net margin calculation. The calculator does not add any expenses automatically.
Can the margin be negative?
Yes. If revenue is $1,000 and costs are $1,200, the loss is $200 and the margin is −20%.
What if revenue is zero?
The calculator can still show a loss equal to the entered costs, but it displays the margin as N/A because division by zero is undefined.
What if costs equal revenue?
You break even: profit is $0.00 and margin is 0.00% when revenue is greater than zero.
Are taxes or fees added?
No. Include any costs you want reflected in the result in your total costs input.