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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
$
0
Selling Price
$
0
GROSS PROFIT MARGIN
0.0%

Profit: $0.00 (Markup: 0.0%)

How Does the Profit Margin Calculator Work?

  1. Subtract the unit cost from the selling price to find gross dollar profit.
  2. Divide the dollar profit by the selling price to get margin percentage.
  3. 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 $100
Cost: $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

Markup divides by cost; margin divides by price. Same dollars, different percentages.
MetricDivides profit by$100 cost, $150 price
MarkupCost ($100)50%
MarginPrice ($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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