Profit Margin Calculator
Calculate profit margin, markup percentage, and cost ratios from revenue and cost.
Last updated: 2026-03-06
Profit margin calculator
Enter your numbers
Enter your revenue and cost of goods sold to calculate profit margin.
Profit Margin
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Enter revenue and cost to calculate your profit margin.
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Example calculations
Tap an example to prefill the calculator with sample values.
Retail Product
$50 revenue, $30 cost
A retail product sold for $50 that costs $30 to produce.
Result: 40.0% margin — 66.7% markup
Software Product
$100/mo revenue, $15/mo cost
A SaaS product with low marginal cost per user.
Result: 85.0% margin — 566.7% markup
Restaurant Meal
$25 menu price, $8 food cost
A restaurant dish with typical food cost ratio.
Result: 68.0% margin — 212.5% markup
How profit margin is calculated
Profit margin measures how much of each dollar of revenue is actual profit. It's one of the most important metrics for any business.
Formula: Profit Margin = ((Revenue − Cost) / Revenue) × 100
Related metrics this calculator shows:
- Gross Profit — Revenue minus cost of goods sold
- Markup — Profit as a percentage of cost (not revenue)
- Cost Ratio — Cost as a percentage of revenue
Margin vs. Markup: A 50% markup results in a 33.3% profit margin. Margin is always lower than markup for the same product because margin uses revenue (the larger number) as its base.
Healthy profit margins vary by industry — software companies often exceed 70%, while grocery stores may operate on 1–3% margins. Understanding your margin helps with pricing, budgeting, and growth planning.
Profit margin FAQs
Answers to common profit margin questions.
What is the difference between margin and markup?
Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. A 50% markup equals a 33.3% margin. Margin is always lower than markup for the same product because the denominator (revenue) is larger.
What is a good profit margin?
It varies by industry. Software/SaaS: 70–90%. Financial services: 25–35%. Retail: 2–5%. Restaurants: 3–9%. Manufacturing: 5–15%. Compare against industry benchmarks for meaningful analysis.
Is this gross or net profit margin?
This calculates gross profit margin (revenue minus cost of goods sold). Net profit margin further subtracts operating expenses, taxes, interest, and other costs.
How do I improve my profit margin?
You can improve margin by increasing prices, reducing costs, improving efficiency, upselling higher-margin products, or reducing waste. Even small improvements compound significantly at scale.
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Disclaimer
This calculator computes gross profit margin from revenue and cost of goods sold. It does not account for operating expenses, taxes, or other overhead costs that affect net profit margin.
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