How to Calculate Profit Margin
Profit margin shows how much of your revenue remains as profit after cost. Enter revenue and cost above to calculate it instantly.
Profit is Revenue − Cost. Markup uses cost as the base instead of revenue.
Margin vs Markup
Margin tells you profit as a percentage of revenue. Markup tells you how much you increased the cost to reach the selling price. The same sale can therefore have a 40% margin and a 66.67% markup.
Profit Margin Example
If revenue is $100 and cost is $60, profit is $40. The profit margin is 40%, while markup is 66.67%.
Frequently Asked Questions
What is a good profit margin?
A good profit margin depends on the industry, business model and cost structure. Compare your margin with similar businesses and make sure it covers operating expenses and desired profit.
How do I calculate profit margin?
Subtract cost from revenue to get profit, divide profit by revenue, then multiply by 100.
What is the difference between margin and markup?
Margin measures profit as a percentage of revenue, while markup measures profit as a percentage of cost.
Can profit margin be negative?
Yes. If cost is greater than revenue, the business is losing money on the sale and profit margin is negative.