Profit Margin Calculator
Calculate gross profit, margin percentage and equivalent markup from revenue and cost.
TL;DR — Profit Margin Calculator: A profit margin calculator measures how much of each sale is profit. Gross margin equals profit divided by revenue, expressed as a percentage. Higher margins indicate stronger pricing power, lower cost structure or both. Use margin to compare products, set prices and benchmark against industry peers.
What is the Profit Margin Calculator?
A profit margin calculator measures how much of each sale is profit. Gross margin equals profit divided by revenue, expressed as a percentage. Higher margins indicate stronger pricing power, lower cost structure or both. Use margin to compare products, set prices and benchmark against industry peers.
How to use the Profit Margin Calculator
- Enter revenue (selling price or total sales).
- Enter cost of goods sold (COGS).
- Read profit, gross margin percentage and equivalent markup percentage.
Formula
Profit = Revenue − Cost Margin % = Profit ÷ Revenue × 100 Markup % = Profit ÷ Cost × 100
Revenue is gross sales; Cost is the direct cost of producing or acquiring the item.
Worked example
Revenue $200, cost $120. Profit = $80. Margin = 80 ÷ 200 = 40%. Markup = 80 ÷ 120 = 66.67%.
Frequently asked questions
What is a good profit margin?
Industry-dependent. Software margins often exceed 70%; restaurants 5–15%; grocery 1–3%. Benchmark against peers.
Gross vs net margin — what is the difference?
Gross margin uses only direct costs (COGS). Net margin subtracts all expenses — operating, interest, taxes — from revenue.
How do I improve profit margin?
Raise prices, lower COGS, reduce overhead, mix in higher-margin products, or improve operational efficiency.
Can margin exceed 100%?
No. Margin is bounded by 100% (zero cost). Markup can exceed 100% — selling price more than double cost.
How does discount affect margin?
A discount reduces revenue without changing cost. A 20% discount on a 40%-margin product more than halves the profit.