Profit Margin Calculator
Calculate profit and profit margin percentage from revenue and cost.
Profit margin
Formula
Profit = Revenue - Cost
Profit Margin = Profit / Revenue * 100 Example
If revenue is $10,000 and cost is $6,500, profit is $3,500. Profit margin is 35%.
For a step-by-step explanation, read how to calculate profit margin.
Common mistakes
- Using cost as the denominator. That calculates markup, not margin.
- Mixing gross cost with operating expenses without labeling the assumption.
- Ignoring negative margin when costs are higher than revenue.
Related tools
Use the Markup Calculator to work from cost to selling price, or the Gross Profit Calculator for revenue and cost of goods sold.
FAQ
What is profit margin?
Profit margin is the percentage of revenue left after costs are subtracted. It shows how much profit a business keeps from each dollar of sales.
How do you calculate profit margin?
Subtract cost from revenue to get profit, then divide profit by revenue and multiply by 100.
Can profit margin be negative?
Yes. If cost is higher than revenue, profit is negative and the margin will also be negative.
Is profit margin the same as markup?
No. Margin divides profit by selling price or revenue. Markup divides profit by cost.
Disclaimer
This calculator is for general business planning and educational use. It does not replace accounting, tax, or financial advice.