How is profit margin calculated?
Subtract cost from revenue, divide by revenue, and multiply by 100.
Profit Margin Calculator
Turn revenue and cost into dollar profit and a clear profit margin percentage.
Enter revenue and cost
Provide total revenue (sales) and total cost for the same period.
About this calculator
How to use Profit Margin Calculator, plus the formulas and logic behind the results.
Tool description
Profit margin shows what share of revenue remains after costs. It is a common KPI for businesses and product lines.
How to use
- Enter revenue (sales) for the period or product.
- Enter matching total cost.
- Select Calculate to view profit and margin %.
- Compare periods with the same cost definitions.
Formulas & reference
Profit = revenue − costProfit margin % = profit ÷ revenue × 100
Margin benchmarks (illustrative)
- Higher margin means more profit per sales dollar
- Negative margin means costs exceed revenue
- Compare like with like (same cost basis)
- Use with the Margin Calculator for unit pricing
Calculation logic
Subtract cost from revenue for profit, then divide by revenue for margin. Zero revenue is rejected for margin calculation.
Define cost consistently (COGS only vs fully loaded). This page does not allocate taxes, depreciation, or one-time items.
Profit Margin Calculator FAQ
Common questions about the calculation and how to interpret the estimate.
What costs should I include?
Match your analysis: COGS for gross margin, or broader operating costs for a net-style estimate.
What if revenue is zero?
Margin is undefined when revenue is zero; enter a positive revenue figure.
Is this the same as markup?
No. Margin is based on revenue; markup is based on cost—see the Margin Calculator.
Can I use monthly or annual figures?
Yes, as long as revenue and cost cover the same period.
Is this tool free?
Yes—free online calculator with guide and FAQ on this page.