Profit Margin Calculator
Enter cost and revenue to calculate profit, profit margin % and markup % instantly
How to Calculate Profit Margin
Profit margin is the percentage of revenue you keep as profit. The gross version measures profit after direct product costs.
Profit Margin (%) = (Profit ÷ Revenue) × 100
Worked Example
You sell a product for $120 that cost $50. Profit is $70 and the profit margin is ($70 ÷ $120) × 100 = 58.33%.
| Revenue | Cost | Profit | Margin % |
|---|---|---|---|
| $120 | $50 | $70 | 58.33% |
| $100 | $75 | $25 | 25.00% |
| $200 | $140 | $60 | 30.00% |
Gross vs Net Profit Margin
This tool calculates gross profit margin (revenue minus direct cost of goods). Net profit margin goes further and subtracts all operating expenses, interest and tax. Gross margin is the right starting point for pricing decisions; learn more in how to calculate gross profit margin.
Improve Your Profit Margin
Once you know your margin, the next step is improving it — through smarter pricing, lower input costs, or a better product mix. See practical tactics in how to improve profit margin, and compare your numbers against gross profit margin by industry.
Frequently Asked Questions
What is profit margin?
+Profit margin is the percentage of revenue kept as profit. Gross profit margin counts profit after direct product costs; net profit margin counts profit after all expenses and tax.
How do you calculate profit margin?
+Subtract cost from revenue to get profit, divide by revenue, multiply by 100. For $120 revenue and $50 cost: ($70 ÷ $120) × 100 = 58.33%.
What is the difference between gross and net profit margin?
+Gross profit margin only subtracts direct cost of goods. Net profit margin subtracts all costs including operating expenses, interest and tax, so it is always lower.
What is a healthy profit margin?
+It varies by industry. A gross margin above 50% is strong in most sectors, while net margins of 10–20% are generally considered healthy for many businesses.
Can I include tax in the calculation?
+Yes. Add an optional tax rate and the calculator will also show the tax amount and net profit after tax.