Profit Margin Calculator

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.