📈 Free Profit Margin Calculator — Instant results
Profit Margin Calculator
Calculate gross profit, profit margin percentage, markup percentage and cost ratio instantly. Essential for pricing products and services correctly.
Profit Margin vs Markup — What is the Difference?
Many business owners confuse profit margin and markup. They are related but calculated differently:
Profit Margin
Profit margin is profit expressed as a percentage of revenue (selling price). Formula: Profit Margin = (Revenue - Cost) / Revenue × 100
Example: Sell for $100, cost $60 → Profit $40 → Margin = 40%
Markup
Markup is profit expressed as a percentage of cost. Formula: Markup = (Revenue - Cost) / Cost × 100
Example: Cost $60, profit $40 → Markup = 66.7%
💡 A 40% margin is NOT the same as a 40% markup. Always clarify which one you mean when pricing products.
What is a Good Profit Margin?
- Retail: 20-50% margin is typical
- Services/Consulting: 50-80% margin is common
- Manufacturing: 10-30% margin
- Software/SaaS: 60-90% margin
- Restaurants: 3-9% net margin
Frequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue that becomes profit after deducting costs. It is calculated as: (Revenue - Cost) / Revenue × 100. A 30% profit margin means for every $100 in sales, $30 is profit.
What is gross profit margin vs net profit margin?
Gross profit margin subtracts only the cost of goods sold (COGS) from revenue. Net profit margin subtracts all expenses including operating costs, taxes and interest. This calculator shows gross profit margin.
How do I increase my profit margin?
To increase profit margin: raise prices, reduce cost of goods, eliminate low-margin products, improve operational efficiency, or focus on higher-margin services. Even a 5% increase in margin can significantly improve profitability.