How to use the profit margin calculator
- Enter your Revenue — the total amount you sell for, before costs.
- Enter your Cost — what it costs to make or buy the item, or your total expenses.
- Read the result. Profit, profit margin and markup all update as you type.
Worked example
On $100,000 of revenue with $60,000 of cost, profit is $40,000. The profit margin is 40% ($40,000 ÷ $100,000) and the markup is 66.67% ($40,000 ÷ $60,000). Margin is measured against revenue; markup is measured against cost — which is why they are different numbers.
The formula
Profit = Revenue − Cost
Profit margin = Profit ÷ Revenue × 100
Markup = Profit ÷ Cost × 100
Margin measures profit against the selling price; markup measures it against the cost. A 40% margin and a 66.67% markup describe the same $40,000 profit — just referenced to different bases.
Profit margin vs markup
These two numbers are easy to mix up. Margin is the share of the selling price that is profit. Markup is how much you add on top of cost. Because they use different denominators, markup is always a larger percentage than margin for the same profit.
- Margin is what matters for pricing discipline. A 40% margin means 40 cents of every revenue dollar is profit.
- Markup is what you often set first. "Key it up 50%" means cost × 1.5, which is a 33.33% margin, not 50%.
- Both can be negative. If cost exceeds revenue, profit is negative and both margin and markup go below zero.
What counts as a good margin
Margins vary widely by industry. Grocery and retail often run single-digit percentages; software and services can exceed 50%. Compare yours to similar businesses rather than to an absolute rule.