Profit Margin Calculator
Find profit, margin % and markup % from cost and revenue.
Work out your profit and the difference between margin and markup — two numbers that are easy to confuse.
How the Math Works
The Profit Margin Calculator uses fundamental financial formulas to determine your earnings relative to sales. Profit is calculated by subtracting the total cost from the total revenue (profit = revenue - cost). The profit margin percentage is then found by dividing profit by revenue and multiplying by 100, which shows what portion of each dollar of sales remains as earnings. Similarly, markup percentage divides profit by the original cost and multiplies by 100, revealing how much you've added to the base cost. These calculations provide different perspectives on the same profit figure, helping you understand both your return on sales and your pricing strategy relative to costs.
Practical Applications
To use this calculator effectively in business scenarios, first determine your total revenue from sales and your total cost of goods sold. For retail businesses, revenue is what customers pay at checkout, while cost includes purchase price, shipping, and restocking fees. For service businesses, revenue comes from client invoices and costs cover labor, materials, and overhead. Plug these values into the calculator to instantly see your profitability metrics. Use the margin percentage to assess overall business health and compare against industry benchmarks, while the markup percentage helps you set competitive prices that ensure profitability for future pricing decisions.
Day-to-Day Use
Understanding your profit margins helps you make smarter decisions in everyday business operations. When shopping for supplies or comparing vendor prices, you can quickly calculate whether a lower-cost option actually improves your bottom line after accounting for potential quality issues or longer delivery times. When reviewing your monthly financial statements, these calculations help you spot trends in your profitability and identify which products or services perform best. Even when negotiating with suppliers or setting prices for individual items, knowing your target margin percentage allows you to work backwards and determine the maximum amount you can pay for materials while still hitting your profit goals.
Worked example
Cost $40, price $100 → profit $60, margin 60%, markup 150%.
FAQ
Margin vs markup?
Margin is profit as a share of the selling price; markup is profit as a share of the cost.