Profit Margin Calculator
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Calculate your gross profit margin from revenue and cost of goods sold. Instant results for smarter business decisions.

Quick Examples

What is Profit Margin?

Profit margin measures how much of your revenue is left over as profit after covering costs. It is expressed as a percentage of the revenue (selling price) โ€” this is what distinguishes it from markup, which is based on cost. Gross profit margin is one of the most important financial metrics for any business, showing at a glance how efficiently it converts sales into profit.

How to Calculate Profit Margin

  1. Subtract the cost from the revenue to get gross profit
  2. Divide gross profit by revenue
  3. Multiply by 100

Formula:

Gross Profit = Revenue โˆ’ Cost

Profit Margin = (Gross Profit รท Revenue) ร— 100

Profit Margin Examples

Example 1
Revenue ยฃ150, Cost ยฃ100 โ†’ Profit ยฃ50 โ†’ Margin 33.33%

Example 2
Revenue ยฃ500, Cost ยฃ350 โ†’ Profit ยฃ150 โ†’ Margin 30%

Example 3
Revenue ยฃ1000, Cost ยฃ600 โ†’ Profit ยฃ400 โ†’ Margin 40%

Common Uses

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Frequently Asked Questions

What is a good profit margin?
It depends on your industry. Grocery retail typically runs 2โ€“5%, software businesses can exceed 70%, and professional services often sit between 20โ€“40%. Compare your margin to industry benchmarks for context.

What is the difference between gross and net profit margin?
Gross profit margin only deducts the direct cost of goods sold. Net profit margin also deducts operating expenses, taxes, and interest โ€” giving the true bottom-line profitability. This calculator computes gross margin.

Can profit margin be negative?
Yes. A negative margin means you are selling for less than your cost โ€” you are making a loss on every sale. This calculator will show this clearly.

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