Finance calculator
Profit Margin Calculator
Use this profit margin calculator to compare gross profit, profit margin, and markup from the same revenue and cost inputs. It is useful for pricing checks and product-level analysis, but it does not replace a full profit review that includes overhead, taxes, refunds, payment fees, labor, and other operating costs.
How does your margin compare?
See the average gross, operating, and net profit margin for your industry:
How to use this calculator
- Enter revenue for the sales amount being analyzed.
- Enter cost for the direct cost tied to that revenue.
- Compare margin and markup carefully because margin uses revenue as the denominator while markup uses cost.
Formula
- Gross profit = revenue - cost
- Profit margin = gross profit / revenue x 100
- Markup = gross profit / cost x 100
Example calculation
If revenue is $10,000 and cost is $6,500, gross profit is $3,500. Profit margin is 35%, while markup is about 53.85%.
How to interpret the results
- Use profit margin to understand what percentage of revenue remains after the entered cost, and use markup to understand pricing above cost.
- Do not treat margin and markup as interchangeable. They use different denominators and can produce very different percentages.
- This is a gross calculation. Operating expenses, taxes, interest, overhead, refunds, and other costs should be reviewed separately.
Frequently asked questions
What is the difference between margin and markup?
Margin compares profit to revenue. Markup compares profit to cost. They are related, but they are not the same percentage.
Does this calculate net margin?
No. It calculates gross profit from one revenue and cost input. Net margin would usually include operating expenses, taxes, interest, and other costs.
Can margin be negative?
Yes. If cost is greater than revenue, gross profit and margin are negative.
Planning disclaimer
MoneyHackWise calculators are for general informational and planning purposes only and do not provide financial, investment, tax, legal, accounting, lending, or business advice. Results are estimates based on the inputs and assumptions shown.
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