Profit Margin Calculator
Calculate your profit, profit margin, and markup from your selling price and cost.
Profit Margin = (Profit ÷ Selling Price) × 100
What is the Profit Margin Calculator used for?
The Profit Margin Calculator is used to determine how much profit a business earns as a percentage of its revenue. It compares the money received from sales with the costs involved in providing the product or service. The result, known as the profit percentage, can help show how much of each sales dollar remains after costs are accounted for.
How do I calculate profit margin?
To calculate profit margin, first subtract the total cost from revenue to find the profit. Then divide the profit by revenue and multiply by 100. For example, if a product generates $800 in revenue and costs $500, the profit is $300. The profit calculation is therefore $300 ÷ $800 × 100 = 37.5%.
What is the difference between revenue, cost, and profit?
Revenue is the total money received from selling products or services. Cost is the amount spent to produce or provide what was sold. Profit is what remains after subtracting cost from revenue. For example, if sales revenue is $2,000 and the related costs are $1,400, the resulting profit is $600. These three figures form the basis of a margin percentage calculation.
Can I calculate profit margin from sales and cost?
Yes. If you know your sales revenue and the related cost, you can calculate the margin by first finding the difference between them. That difference is the profit. For example, sales of $5,000 with costs of $3,500 produce $1,500 in profit, resulting in a 30% margin. This approach can also be used when reviewing cost of goods sold against sales revenue.
How does a change in selling price affect profit margin?
Changing the selling price can change the profit margin when costs remain the same. If the price increases while the cost does not, the profit per sale rises and the margin generally increases. Conversely, lowering the selling price reduces the amount left after costs. For example, a product costing $40 and selling for $60 has a different margin from the same product sold for $50.