Margin Calculator

How to Calculate Profit Margin?

Profit margin is the percentage of revenue that exceeds costs. It shows how much profit a business retains for every unit sold.

The profit margin calculator formula is: (Revenue – Costs) ÷ Revenue × 100

How to Use the Profit Margin Calculator?

Using our online profit margin calculator is quick and easy:

1. Enter your total costs (either cost of goods sold or operating costs).
2. Enter your total revenue.
3. Click Calculate.
4. Instantly see your gross profit, net profit, and profit margin percentage.

Whether you’re calculating for one product or your entire business, our margin profit calculator helps you make faster, smarter financial decisions.

Examples of Calculating Profit Margin

Example 1 – Gross Profit Margin:

Sarah runs a small clothing stall at the weekend markets. Last weekend, she made $1,000 in total sales (revenue) by selling shirts and jackets.

The cost of buying the clothes from her supplier was $600 (this is her Cost of Goods Sold).

She wants to calculate her Gross Profit and Gross Profit Margin to understand how much she's earning before paying other business expenses, such as rent or advertising.

Calculation:

• Revenue: $1,000
• Cost of Goods Sold: $600
• Gross Profit: $1,000 – $600 = $400
• Gross Profit Margin: ($400 ÷ $1,000) × 100 = 40%

Sarah’s gross profit margin is 40%, which means she keeps 40 cents from every dollar of sales before other expenses.

Example 2 – Operating Profit Margin:

Amelia runs a private tutoring business, helping students with maths and English. Over the course of one month, she earned $10,000 in revenue from her tutoring sessions.

Her operating costs, including rent for a small tutoring space, printing worksheets, learning materials, advertising, and wages for a part-time assistant, totaled $7,500.

Now she wants to calculate her Operating Profit and Operating Profit Margin to see how profitable her tutoring business is after paying all regular expenses.

Calculation:

• Revenue: $10,000
• Operating Costs: $7,500
• Operating Profit: $10,000 – $7,500 = $2,500
• Operating Profit Margin: ($2,500 ÷ $10,000) × 100 = 25%

Amelia’s operating profit margin is 25%, which means she retains 25 cents of every dollar after covering business costs, such as materials and wages.

With our built-in profit margin calculator formula, you can easily add or subtract costs to see how they affect your margins.

Disclaimer

This margin calculator is provided for general informational purposes only. Financial results may vary depending on your business type, industry, and accounting practices. Always consult with a qualified accountant or financial advisor before making business decisions based on margin calculations.

FAQs

How to figure out profit margin?

The profit margin is calculated by subtracting costs from revenue, then dividing the result by revenue, and finally multiplying by 100.

Formula: (Revenue – Costs) ÷ Revenue × 100

What is the formula for calculating profit?

The formula for calculating profit:

Profit = Revenue − Costs.

And the formula for calculating profit margin:

profit margin = (Revenue – Costs) ÷ Revenue × 100

How to calculate 20% profit on the selling price?

A 20% profit on the selling price means a 20% profit margin.

Selling Price = Cost ÷ (1 − 0.20) = Cost ÷ 0.80.

(So if cost is $80, SP = $80 ÷ 0.80 = $100; profit = $20.)

What is 30% profit of $100?

30% of $100: 

0.3 × 100= $30 profit.

What is a 50% profit margin for $10?

Two common interpretations:

• If $10 is the cost, then SP = $10 ÷ (1 − 0.50) = $20 (profit = $10).
• If $10 is the selling price, a 50% margin means profit = 50% × $10 = $5 (cost = $5).

What is a 70% profit margin?

It means profit is 70% of revenue, and costs are 30% of revenue.

Example: If revenue is $100, profit = $70, and costs = $30.

What is a profit margin example?

Revenue $1,000, Cost of Goods Sold $600

Gross Profit = $400

Gross Profit Margin = ($400 ÷ $1,000) × 100 = 40%.