Profit Margin Calculator
Calculate gross profit, profit margin percentage, and markup from cost and revenue
Profit Margin Inputs
Quick Examples
Enter Cost & Revenue
Fill in the cost and revenue to calculate your profit margin, markup, and break-even revenue.
Your Results
Detailed Metrics
Use these results to evaluate product profitability and set competitive pricing.
Understanding Profit Margins
What is Profit Margin?
Profit margin measures how much of each dollar in revenue your business keeps as profit after accounting for costs. A higher margin means greater profitability and financial health.
Margin vs. Markup
Margin is profit divided by revenue (e.g., $40/$100 = 40%). Markup is profit divided by cost (e.g., $40/$60 = 66.7%). They sound similar but produce very different numbers and serve different purposes.
Pricing Strategy
Use margin to assess overall profitability and compare across products. Use markup to set selling prices from costs. A healthy business typically targets margins of 20-50% depending on the industry.
Profit Margin FAQ
What is a good profit margin?
It depends on the industry. Retail businesses often aim for 2-5% net margin, software companies may target 70-80%, and restaurants typically run 3-9%. A gross margin above 30% is generally considered healthy across most industries.
What is the difference between gross margin and net margin?
Gross margin only considers the cost of goods sold (COGS), while net margin accounts for all expenses including operating costs, taxes, and interest. Net margin gives a more complete picture of overall profitability.
How do I improve my profit margin?
You can improve margins by reducing costs (negotiating with suppliers, improving efficiency), increasing prices strategically, focusing on higher-margin products, or improving sales volume to spread fixed costs over more revenue.
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