Profit Margin Calculator Examples
See worked examples of profit, margin, markup, and cost ratio for different pricing and cost scenarios.
These examples show how the Profit Margin Calculator works in realistic situations. They can help you understand how pricing, cost changes, and different sales amounts affect profit results.
Example 1: Simple product sale
A business sells a product for $1,000 and the total cost tied to that sale is $700.
Input Summary
Revenue
$1,000
Cost
$700
Calculation Breakdown
- 1Find profit1,000 - 700$300
- 2Find profit margin(300 / 1,000) × 10030%
- 3Find markup(300 / 700) × 10042.86%
- 4Find cost ratio(700 / 1,000) × 10070%
Result Summary
Find cost ratio
70%
Profit Margin Calculator
This sale generates $300 profit on a 30% margin.
Example 2: Low-margin wholesale order
A wholesaler books $5,000 in revenue and spends $4,400 in cost to fulfill the order.
Input Summary
Revenue
$5,000
Cost
$4,400
Calculation Breakdown
- 1Find profit5,000 - 4,400$600
- 2Find profit margin(600 / 5,000) × 10012%
- 3Find markup(600 / 4,400) × 10013.64%
- 4Find cost ratio(4,400 / 5,000) × 10088%
Result Summary
Find cost ratio
88%
Profit Margin Calculator
The order produces $600 profit with a 12% margin and an 88% cost ratio.
Example 3: High-margin service project
A consultant earns $3,000 from a project and has $900 in related cost.
Input Summary
Revenue
$3,000
Cost
$900
Calculation Breakdown
- 1Find profit3,000 - 900$2,100
- 2Find profit margin(2,100 / 3,000) × 10070%
- 3Find markup(2,100 / 900) × 100233.33%
- 4Find cost ratio(900 / 3,000) × 10030%
Result Summary
Find cost ratio
30%
Profit Margin Calculator
This project creates $2,100 profit at a 70% margin.
Example 4: Break-even sale
A seller brings in $800 in revenue and the total cost is also $800.
Input Summary
Revenue
$800
Cost
$800
Calculation Breakdown
- 1Find profit800 - 800$0
- 2Find profit margin(0 / 800) × 1000%
- 3Find markup(0 / 800) × 1000%
- 4Find cost ratio(800 / 800) × 100100%
Result Summary
Find cost ratio
100%
Profit Margin Calculator
The sale breaks even with zero profit and zero margin.
Example 5: Loss-making transaction
A business makes $1,200 in revenue but spends $1,350 to deliver the sale.
Input Summary
Revenue
$1,200
Cost
$1,350
Calculation Breakdown
- 1Find profit1,200 - 1,350-$150
- 2Find profit margin(-150 / 1,200) × 100-12.5%
- 3Find markup(-150 / 1,350) × 100-11.11%
- 4Find cost ratio(1,350 / 1,200) × 100112.5%
Result Summary
Find cost ratio
112.5%
Profit Margin Calculator
This transaction loses $150 and produces a negative 12.5% margin.
How to Read Your Results
Profit is the currency amount left after subtracting cost from revenue.
Profit margin shows the percentage of revenue kept as profit.
Markup shows profit relative to cost, so it will usually be higher than margin when profit is positive.
Cost ratio shows how much of every revenue dollar is consumed by cost.
Negative profit margin means the revenue did not cover the cost.
Assumptions & Important Notes
- Each example uses revenue and cost from the same sale, project, or period.
- Examples use simple gross profit relationships only.
- Taxes, financing, and accounting adjustments are not added unless already included in the numbers.
- Percentages are rounded for readability.
Related Examples
Frequently Asked Questions
What is a good profit margin in these examples?
That depends on the industry, product type, and cost structure. The examples are educational and not benchmarks.
Why is markup higher than margin in profitable examples?
Because markup divides profit by cost, while margin divides profit by revenue. Cost is usually the smaller base.
Can I use these examples for services and products?
Yes. The same formulas work for either as long as revenue and cost cover the same scope.
What does a 0% profit margin mean?
It means revenue exactly equals cost, so the activity breaks even.
What does a cost ratio above 100% mean?
It means cost is greater than revenue, which indicates a loss.
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