Profit Margin Calculator
Calculate gross profit and margin percentage from revenue and cost.
Understanding your profit margin is fundamental to pricing strategy, business planning, and financial analysis. This calculator computes gross margin, profit amount, and markup percentage from cost and revenue figures — clearly showing the relationship between what you spend and what you keep.
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How to Calculate Profit Margin
- Enter the cost price — the total cost of the product or service.
- Enter the revenue or selling price — the amount received from the sale.
- Click Calculate — the tool shows gross profit, profit margin percentage, and markup percentage.
- Analyse your pricing — compare margins across products to optimise your pricing strategy.
Frequently Asked Questions
What is profit margin? ▼
Profit margin is the percentage of revenue that is profit. It is calculated as: ((Revenue − Cost) ÷ Revenue) × 100. A product costing $60 that sells for $100 has a 40% profit margin. Higher margins mean more profit per sale.
What is the difference between gross and net margin? ▼
Gross margin considers only the direct cost of goods sold (COGS). Net margin subtracts ALL expenses — including rent, salaries, marketing, taxes, and interest. A business might have a 60% gross margin but only a 15% net margin after operating expenses.
What is a good profit margin? ▼
It varies by industry. Software/SaaS: 70–90% gross margin. Retail: 25–50%. Restaurants: 3–9% net. Manufacturing: 10–25%. Professional services: 15–40%. Compare your margin to industry benchmarks rather than a universal standard.
What is the difference between margin and markup? ▼
Both measure profitability but use different denominators. Margin = Profit ÷ Revenue. Markup = Profit ÷ Cost. A $40 cost and $100 revenue means: margin = 60%, markup = 150%. Margin is always lower than markup for the same transaction.
How do I improve my profit margin? ▼
Increase revenue (raise prices, upsell, cross-sell), decrease costs (negotiate supplier prices, improve efficiency), or both. Even small improvements compound: a 2% margin increase on $1M revenue adds $20K annually to profit.
Is my data stored? ▼
No. All calculations run in your browser. No financial data is sent to any server.