Profit Margin Calculator
Calculate profit, profit margin, markup, revenue, and cost relationships to understand how much you earn on each sale.
Overview
Use this Profit Margin Calculator to quickly estimate profit, profit margin, markup, and cost ratio from your revenue and cost figures. It can help with pricing checks, product profitability reviews, and simple business planning.
How it works
The calculator subtracts cost from revenue to find profit. It then divides profit by revenue to calculate profit margin, and divides profit by cost to calculate markup. Cost ratio is calculated by dividing cost by revenue. These measures help show how efficiently revenue turns into profit.
How to use this calculator
- 1Enter your total revenue or selling price.
- 2Enter the total cost linked to that revenue.
- 3Review the calculated profit amount.
- 4Check the profit margin to see how much of revenue you keep as profit.
- 5Compare the markup and cost ratio for a fuller view of pricing performance.
Example Calculation
Revenue
$1,000
Cost
$700
Profit
$300.00
If revenue is 1000 and cost is 700, the profit is 300, the profit margin is 30%, the markup is about 42.86%, and the cost ratio is 70%.
Frequently asked questions
What does this Profit Margin Calculator estimate?
It estimates profit, profit margin, markup, and cost ratio based on the revenue and cost values you enter.
What is the difference between profit margin and markup?
Profit margin is profit divided by revenue, while markup is profit divided by cost. They measure profitability in different ways and are not the same percentage.
Can I use this calculator for products or services?
Yes. You can use it for a single product, a service, a project, or a whole business period as long as revenue and cost match the same scope.
What costs should I include?
Include the costs you want to measure against the revenue figure, such as direct costs or total costs. Just be consistent so the result is meaningful.
Why is my profit margin negative?
A negative margin means your cost is higher than your revenue, so you are making a loss on that item or period.
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Assumptions and warnings
Assumptions
- Revenue and cost are entered for the same product, service, order, or time period.
- All values are estimates and depend on the accuracy of the numbers entered.
- The calculator uses simple gross profit relationships and does not include tax, financing, or other accounting adjustments unless already included in your inputs.