Business
Profit Margin Calculator
Profit margin tells you how much of each dollar in revenue you actually keep as profit, after subtracting cost. It's one of the fastest ways to sanity-check pricing, whether you're running a shop, a service business, or a subscription product.
The formula
profit = revenue − cost
margin (%) = (profit ÷ revenue) × 100
Worked example
A product sells for $1,000 and costs $650 to produce or acquire:
profit = 1,000 − 650 = 350
margin = (350 ÷ 1,000) × 100 = 35%
That means 35 cents of every dollar in revenue is profit, before other operating costs are factored in.
Frequently asked questions
What's the difference between margin and markup?
Margin is profit as a percentage of revenue (sale price). Markup is profit as a percentage of cost. The same $350 profit on a $1,000 sale with $650 cost is a 35% margin but a 53.8% markup.
What's a good profit margin?
It varies heavily by industry — retail often runs 20-50%, software/SaaS can exceed 70-80%, while grocery and wholesale margins are often in the single digits. Compare against your specific industry, not a universal benchmark.
Does profit margin account for all expenses?
This calculator computes gross margin from revenue and direct cost. Net margin, which factors in operating expenses, taxes and overhead, will be lower.