Profit Margin Calculator

Calculate gross profit margin percentage and profit amount from revenue and cost. Instantly see how much profit you make per dollar of sales.

Revenue ($)

Cost ($)

Profit Margin—

Profit Amount—

How to Calculate Profit Margin

Profit Margin (%) = ((Revenue − Cost) / Revenue) × 100

Profit margin tells you what percentage of your revenue is actual profit after covering costs. A higher margin means more profit per dollar of sales.

Example:
Revenue = $1,000, Cost = $600
Profit = $1,000 − $600 = $400
Profit Margin = ($400 / $1,000) × 100 = 40%

Profit Margin vs. Markup

Profit margin is based on revenue (selling price), while markup is based on cost. A 50% markup results in a 33.3% profit margin. Use our Markup Calculator to convert between the two.

What is a good profit margin?

It varies by industry. Retail typically sees 2–5%, software companies 20–40%, and luxury goods 50%+. Compare your margin to industry benchmarks for meaningful context.

FAQ

What's the difference between gross and net profit margin?

Gross profit margin only subtracts direct costs (COGS). Net profit margin subtracts all expenses including taxes, rent, salaries, and overhead.

Can profit margin be negative?

Yes. If your costs exceed revenue, you have a negative margin, meaning you're losing money on each sale.

Last updated: 2026-08-08