Profit Margin Calculator
Calculate gross profit, profit margin, markup percentage, and cost ratio. Add operating expenses to compare gross vs net margin.
Input Details
Gross Profit
Profit Margin
Markup
Cost Ratio
Revenue Breakdown
Margin Scenarios for $10,000.00 Revenue
See what different margin targets look like at your revenue level.
| Target Margin | Profit | Max Cost | Markup |
|---|---|---|---|
| 5% | $500.00 | $9,500.00 | 5.26% |
| 10% | $1,000.00 | $9,000.00 | 11.11% |
| 15% | $1,500.00 | $8,500.00 | 17.65% |
| 20% | $2,000.00 | $8,000.00 | 25.00% |
| 25% | $2,500.00 | $7,500.00 | 33.33% |
| 30% | $3,000.00 | $7,000.00 | 42.86% |
| 40%(current) | $4,000.00 | $6,000.00 | 66.67% |
| 50% | $5,000.00 | $5,000.00 | 100.00% |
| 60% | $6,000.00 | $4,000.00 | 150.00% |
| 75% | $7,500.00 | $2,500.00 | 300.00% |
How to Use the Profit Margin Calculator
This profit margin calculator helps you quickly determine how much of your revenue is actual profit. Choose your input mode based on the data you have: enter revenue and cost of goods, or revenue and profit directly.
The calculator computes four key metrics instantly: Gross Profit (revenue minus cost), Profit Margin (profit as a percentage of revenue), Markup (profit as a percentage of cost), and Cost Ratio (cost as a percentage of revenue). The formulas used are: Margin = (Profit / Revenue) x 100 and Markup = (Profit / Cost) x 100.
For a more complete picture, add your operating expenses to see both gross and net margins side by side. The comparison table below shows what different margin targets would look like at your current revenue level. All calculations run entirely in your browser with no data sent to any server.
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Frequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after subtracting costs. It is calculated as (Profit / Revenue) x 100. For example, if you sell a product for $100 and it costs $60 to produce, your profit margin is 40%. Profit margin measures how efficiently a business converts revenue into profit.
What is the difference between profit margin and markup?
Profit margin and markup both measure profitability but use different bases. Margin is profit as a percentage of revenue (selling price): Margin = Profit / Revenue x 100. Markup is profit as a percentage of cost: Markup = Profit / Cost x 100. For example, a product costing $60 sold for $100 has a 40% margin but a 66.67% markup. Margin is always lower than markup for the same transaction.
What is a good profit margin?
A good profit margin varies by industry. Retail businesses typically see 2-5% net margins, while software companies may achieve 20-40% or more. Service businesses often target 15-25%. Generally, a gross margin above 50% is considered strong, while a net margin above 10% is healthy for most industries. The key is comparing your margin to industry benchmarks.
What is the difference between gross margin and net margin?
Gross margin measures profit after subtracting only the direct cost of goods sold (COGS) from revenue. Net margin goes further by also subtracting operating expenses like rent, salaries, marketing, and utilities. Gross margin shows production efficiency, while net margin shows overall business profitability. Net margin is always equal to or lower than gross margin.