Profit Margin Calculator
A profit margin calculator measures gross profit percentage and markup ratio by comparing revenue against the cost of goods sold (COGS). Using Margin = ((Revenue - Cost) / Revenue) × 100%, it reveals that earning $50 gross profit on a $150 sale yields a 33.33% profit margin.
By Maya Chen (Personal Finance Editor) · Reviewed by Daniel OkoroUpdated · Published
Cost of Goods
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0
Selling Price
$
0
GROSS PROFIT MARGIN
Profit: $0.00 (Markup: 0.0%)
How Does the Profit Margin Calculator Work?
- Subtract the unit cost from the selling price to find gross dollar profit.
- Divide the dollar profit by the selling price to get margin percentage.
- Divide the dollar profit by the unit cost to get markup percentage.
What Is the Profit Margin Formula?
Margin% = ((Revenue - Cost) / Revenue) × 100%
Profit divided by selling price (revenue).
Variables
Margin%:Gross profit margin percentage
Revenue:Selling price
Cost:Cost of goods sold (COGS)
How Do You Calculate Profit Margin Step by Step?
An item costs $40 to make and sells for $100Cost: $40.00
Revenue: $100.00
Gross Profit: $100 - $40 = $60
Profit Margin: ($60 / $100) × 100% = 60.0%
Markup: ($60 / $40) × 100% = 150.0%
Final Solution:60.0% Margin ($60 Profit)
Profit margin vs markup on a $100 cost sold for $150
| Metric | Divides profit by | $100 cost, $150 price |
|---|---|---|
| Markup | Cost ($100) | 50% |
| Margin | Price ($150) | 33.3% |
Profit Margin Questions and Answers
Profit margin is profit relative to the selling price ($ profit ÷ selling price). Markup is profit relative to cost ($ profit ÷ cost). Markup is always higher than margin for positive profits.
Where Do These Profit Margin Standards Come From?
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