Profit Margin Calculator
Profit margin is a core measure of business profitability. It reflects the percentage of revenue that exceeds expenses. Knowing your margin helps you price products sustainably and evaluate business performance.
Calculated Result
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Notice: This calculator provides general business estimates. It does not account for company-specific overhead, taxes, or financing charges, and is not professional financial advice.
Formula & Mechanics
Profit Margin (%) = ((Revenue - Cost) / Revenue) × 100
Gross profit is calculated by subtracting total costs from revenue. Dividing gross profit by total revenue yields the margin percentage.
Worked Step-by-Step Example
Scenario: A product sells for $150 and costs $90 to manufacture.
- Calculate Gross Profit: $150 - $90 = $60
- Divide by Revenue: $60 ÷ $150 = 0.40
- Multiply by 100: 0.40 × 100 = 40%
The profit margin is 40.0%, with $60 profit per unit.
Frequently Asked Questions
How does margin differ from markup?
Margin compares profit to the final selling price (revenue), whereas markup compares profit to the wholesale cost. Margin is always lower than markup for the same transaction.
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