Calculate profit and margin percentage from revenue and cost. Use the result to evaluate pricing, product profitability, sales performance, and cost changes accurately for businesses.
| Markup | Margin | Markup | Margin |
|---|---|---|---|
| 10% | 9.09% | 60% | 37.50% |
| 15% | 13.04% | 65% | 39.39% |
| 20% | 16.67% | 70% | 41.18% |
| 25% | 20.00% | 75% | 42.86% |
| 30% | 23.08% | 80% | 44.44% |
| 35% | 25.93% | 85% | 45.95% |
| 40% | 28.57% | 90% | 47.37% |
| 45% | 31.03% | 95% | 48.72% |
| 50% | 33.33% | 100% | 50.00% |
| 55% | 35.48% | 200% | 66.67% |
Margin = [(Selling price − Cost) ÷ Selling price] × 100The calculation uses the price, revenue, cost, rate or quantity fields shown by the tool. Gross and net figures are not interchangeable, and taxes, overhead, returns, discounts or financing should be included only in the field intended for them.
The Margin Calculator determines the profit earned from a sale and expresses that profit as a percentage of revenue. Enter the selling price or revenue and the total cost associated with the product, service, or transaction. The calculator returns the profit amount and profit margin percentage, helping businesses evaluate pricing, compare products, review costs, and estimate profitability.
Margin measures how much of each revenue dollar remains after the included costs are deducted. A 30% margin means that $0.30 of every $1.00 in revenue remains as profit before any costs excluded from the calculation.
Both inputs must use the same currency and cover the same unit or timeframe. For a U.S. business, amounts will normally be entered in U.S. dollars. However, the formula works with any currency when both values use that currency consistently.
The Margin Calculator subtracts cost from revenue and divides the resulting profit by revenue. It then multiplies the result by 100 to display the margin as a percentage.
The calculation can be performed for an individual product, an ecommerce order, a client project, a sales channel, or a complete business period. The meaning of the result depends on which costs are included. Using only cost of goods sold generally produces a gross margin. Including operating expenses, interest, taxes, and other applicable costs may produce an operating or net margin, depending on the accounting definition used.
Consistency is essential when comparing results. A unit selling price must be matched with a unit cost, while monthly revenue must be matched with costs incurred for that same month.
Profit = Revenue − Cost
Margin (%) = ((Revenue − Cost) ÷ Revenue) × 100
Revenue must be greater than zero for a standard margin percentage to be calculated. If revenue is zero, division by zero makes the percentage undefined.
Suppose a U.S. ecommerce retailer sells a kitchen appliance for $160. The product, inbound freight, and packaging cost the retailer $104 per unit.
Profit = Revenue − Cost
Margin (%) = (Profit ÷ Revenue) × 100
Profit = $160 − $104 = $56
Margin = ($56 ÷ $160) × 100 = 35%
| Metric | Result |
|---|---|
| Profit per unit | $56 |
| Profit margin | 35% |
The retailer retains $56 from each $160 sale after paying the $104 of included costs. That amount equals 35% of revenue. If advertising fees, payment-processing charges, returns, overhead, taxes, or other expenses were excluded, the result should not be interpreted as net profit margin.
A higher positive margin means a larger portion of revenue remains after the selected costs. A lower positive margin means those costs consume more of each sales dollar. A zero margin indicates that revenue equals cost, while a negative margin indicates that the included costs exceed revenue.
| Result | Meaning |
|---|---|
| Positive margin | Revenue is greater than the costs included in the calculation. |
| Zero margin | Revenue equals the included costs, producing no profit on that basis. |
| Negative margin | The included costs exceed revenue, resulting in a loss. |
| Margin above 100% | Usually signals negative cost, unusual adjustments, or incorrect inputs in a standard sales calculation. |
There is no universal ideal margin. Results vary by industry, product category, sales channel, business model, company maturity, competitive conditions, and the costs included. A useful comparison should apply the same accounting method across products or periods.
Businesses can test how a proposed selling price affects unit profit and margin. The result should be considered alongside customer demand, competitive pricing, taxes, and channel costs.
Applying a consistent cost definition allows a company to compare the profitability of products, service packages, projects, or customer segments. Margin percentage can be more comparable than profit dollars when selling prices differ.
Online sellers can calculate margin after product cost, fulfillment, marketplace fees, payment charges, discounts, and expected returns. Separate calculations can reveal whether the same item performs differently across sales channels.
A projected margin can be applied to expected revenue to estimate profit under stated assumptions. Scenario calculations can show how supplier price changes, discounts, or different sales volumes may affect the plan.
Margin provides context for revenue growth. A campaign may generate more sales while producing less profit if discounts, advertising costs, commissions, or fulfillment expenses rise substantially.
Comparing margin across equivalent periods can help identify changes in purchasing, production, labor, or delivery costs. The comparison is meaningful only when revenue and cost classifications remain consistent.
Margin and markup both compare profit with another amount, but they use different denominators. Margin divides profit by revenue, while markup divides profit by cost.
| Metric | Formula | Comparison Base |
|---|---|---|
| Margin | Profit ÷ Revenue × 100 | Selling price or revenue |
| Markup | Profit ÷ Cost × 100 | Cost |
In the example above, the $56 profit represents a 35% margin on $160 of revenue. The same transaction has a markup of approximately 53.85% because $56 is divided by the $104 cost. These percentages are not interchangeable.
Margin percentage shows the share of revenue remaining as profit after the costs included in the calculation. A 25% margin represents $25 of profit for every $100 of revenue on that basis.
Subtract cost from revenue to find profit. Divide profit by revenue and multiply by 100. For example, $30 of profit from $120 of revenue produces a 25% margin.
Yes. A negative margin occurs when the included costs exceed revenue. It indicates a loss for the product, transaction, project, or period being measured.
Gross margin typically subtracts cost of goods sold from revenue. Net margin accounts for a broader set of expenses, potentially including operating costs, interest, and taxes. Exact classifications should follow the business’s accounting practices.
Margin is calculated from selling price or revenue. A percentage calculated from cost is markup.
When cost and the desired margin are known, use: Selling Price = Cost ÷ (1 − Target Margin as a decimal). A target margin of 30% should be entered as 0.30 in the formula.
Enter a realistic current case, calculate the result, then raise the cost or lower the selling price. The comparison shows how sensitive the margin, break-even point, tax amount or total cost is to that change.
Beyond calculating margin from revenue and cost, businesses may need to determine a selling price, estimate profit from a known margin, or test how cost and price changes affect profitability.
Selling Price = Cost ÷ (1 − Target Margin)
Enter the target margin as a decimal. For example, use 0.30 for a 30% target margin.
If a product costs $70 and the business wants a 30% margin:
Selling Price = $70 ÷ (1 − 0.30) = $70 ÷ 0.70 = $100
A $100 selling price produces $30 in profit and a 30% margin before considering any costs excluded from the $70 input.
Profit = Revenue × Margin
If monthly revenue is $50,000 and the margin is 24%:
Profit = $50,000 × 0.24 = $12,000
Cost = Revenue × (1 − Margin)
If revenue is $20,000 and the margin is 35%:
Cost = $20,000 × (1 − 0.35) = $13,000
Testing several pricing and cost combinations can show how operational changes affect margin. The following scenarios use a product with an original selling price of $100 and a cost of $70.
| Scenario | Revenue | Cost | Profit | Margin |
|---|---|---|---|---|
| Original transaction | $100 | $70 | $30 | 30% |
| 10% price discount | $90 | $70 | $20 | 22.22% |
| $5 cost increase | $100 | $75 | $25 | 25% |
| $5 price increase | $105 | $70 | $35 | 33.33% |
The comparison demonstrates that a 10% price discount does not reduce margin by only 10%. Profit falls from $30 to $20, while margin declines from 30% to approximately 22.22%. Businesses should calculate the financial effect of discounts instead of assuming that revenue and margin change at the same rate.
The correct cost input depends on the purpose of the analysis. Clearly defining the cost scope prevents gross, contribution, and net profitability measures from being confused.
| Analysis Type | Costs Commonly Considered | Typical Use |
|---|---|---|
| Product gross margin | Product acquisition or production cost | Comparing products and reviewing base pricing |
| Order-level margin | Product cost, packaging, fulfillment, transaction fees, and applicable shipping | Evaluating ecommerce orders and sales channels |
| Contribution margin | Variable costs associated with generating the sale | Supporting break-even and short-term operating decisions |
| Net profit margin | Operating expenses and other applicable business expenses | Evaluating overall company profitability |
Accounting definitions can vary by business and reporting purpose. When comparing periods, products, or competitors, confirm that the same types of costs are included in each calculation.