Profit Margin Calculator
Enter your revenue and cost below to see your profit margin instantly.
- Profit —
- Markup —
Profit Margin Formula
Profit margin measures how much of your revenue is left over as profit after subtracting the cost of goods sold (COGS):
Profit Margin (%) = (Revenue − Cost) ÷ Revenue × 100
This is different from markup, which measures profit against cost instead of revenue: Markup (%) = (Revenue − Cost) ÷ Cost × 100. The two numbers are always different unless your cost is $0, so it’s easy to accidentally price a product wrong by confusing one for the other.
What Each Input Means
Revenue is the total amount a customer pays for the product or service — your selling price.
Cost of Goods Sold is what it actually cost you to produce, source, or deliver what you sold: materials, direct labor, wholesale cost, or similar direct costs. It does not include overhead like rent or marketing.
Worked Example
Say you sell a product for $1,000 and it costs you $600 to produce. Your profit is $1,000 − $600 = $400. Your profit margin is $400 ÷ $1,000 × 100 = 40%. Your markup, by contrast, is $400 ÷ $600 × 100 = 66.67% — a meaningfully different number from the same $400 of profit.
Frequently Asked Questions
What is the difference between profit margin and markup?
Profit margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. The two numbers are always different unless cost is zero.
What is a good profit margin?
It varies widely by industry. Retail often runs 20-50%, while service businesses can run much higher. Compare against others in your specific industry rather than a single universal target.
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