Profit margin tells you what share of every sale you keep as gross profit. Enter cost and revenue to see your margin, or set a target margin to get the price you need to charge.
How to use the Profit Margin Calculator
- 1 Enter your cost and revenue (or selling price).
- 2 Read gross profit, margin and the matching markup.
- 3 Switch to "Price for target margin" to price new products.
Formula
Profit = Revenue − Cost Margin = Profit ÷ Revenue × 100 Price for target margin = Cost ÷ (1 − Margin ÷ 100)
Worked examples
Input: Cost $65, revenue $100
Result: 35% margin
Profit $35, markup 53.8%
Input: Cost $30, target 40% margin
Result: Price $50
$30 ÷ 0.6 = $50
Gross vs. net margin
This calculator measures gross margin — revenue minus the direct cost of the goods sold. Net margin also subtracts overheads such as rent, salaries, marketing and tax, so it is always lower. Track both: gross margin shows whether your pricing works, net margin shows whether the business does.
Why target-margin pricing divides
To keep 40% of the price as profit, cost must be the other 60% of the price. So price = cost ÷ 0.60. Multiplying cost by 1.40 would only give a 28.6% margin.
Frequently asked questions
What is a good profit margin?
It depends heavily on the industry. Software can exceed 70% gross margin, while grocery retail may operate on under 30%. Compare against your sector.
Can profit margin be negative?
Yes — if cost exceeds revenue you are selling at a loss, and the margin is negative.
Is margin the same as markup?
No. Margin is profit as a share of price; markup is profit as a share of cost.
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