Profit Margin Calculator
Enter any two values to calculate your profit margin
Understanding Profit Margins
Learn the key concepts behind profit margin calculations and why they matter for your business
What is Margin?
Profit margin is the percentage of revenue that remains after subtracting costs. It's a key indicator of business profitability.
Calculate Cost
Cost represents the total expenses required to produce or acquire your product or service.
Revenue Impact
Revenue is the total income from sales. Understanding margins helps optimize pricing strategies.
Target Profit
Set and achieve profit goals by understanding the relationship between cost, price, and margin.
Margin vs. Markup: What's the Difference?
Profit Margin
Margin is calculated as a percentage of the selling price. Formula: (Revenue - Cost) ÷ Revenue × 100
Example: If you sell for $100 with a $60 cost, your margin is 40%
Markup
Markup is calculated as a percentage of the cost. Formula: (Revenue - Cost) ÷ Cost × 100
Example: With the same numbers above, your markup is 66.67%
Key Takeaway: Margin is always less than markup for the same transaction. Most businesses track margin because it directly relates to profitability.