Profit Margin Calculator
Calculate your net profit margin and markup percentage. Enter revenue and total costs to see how efficiently your business converts sales into profit.
Total income from sales
All expenses including COGS, operating costs, taxes
Enter your revenue and costs, then click Calculate to see your profit margin.
How Profit Margins Work
What Is Profit Margin?
Profit margin measures how much of your revenue turns into actual profit. It is expressed as a percentage and tells you how efficiently your business converts sales into earnings. A higher margin means more of each dollar you earn stays in your pocket after covering all expenses.
The Core Formulas
Three key calculations drive profit margin analysis:
- **Net Profit** = Revenue − Total Costs. This is the absolute dollar amount you keep after paying all expenses including materials, labor, rent, marketing, and every other cost of doing business.
- **Profit Margin** = (Net Profit ÷ Revenue) × 100. This percentage shows what share of your total sales becomes profit. A 25% margin means you keep $0.25 from every dollar of revenue.
- **Markup** = (Net Profit ÷ Total Costs) × 100. This percentage shows how much you add on top of your costs. A 33% markup on a $75 cost means you sell at $100.
Margin vs. Markup
These two metrics are often confused but serve different purposes. Margin is based on the selling price and is useful for financial reporting and comparing business performance. Markup is based on cost and is useful for pricing decisions. The same transaction always produces a lower margin number than markup number. For instance, a 50% markup equals a 33.3% margin.
Why Margins Matter
Tracking profit margins over time reveals whether your business is becoming more or less efficient. Declining margins may signal rising costs, pricing pressure, or shifting product mix. Investors, lenders, and acquirers all scrutinize margins when evaluating businesses. Healthy, consistent margins indicate a sustainable and well-managed operation.