Profit Margin Calculator
Use the Profit Margin Calculator to find profit amount, margin percentage, and pricing performance with examples, steps, and FAQs.
How to Calculate Profit Margin
Profit margin = (Revenue − Costs) ÷ Revenue × 100. For example, if you sell a product for $100 and it costs $60 to make, your profit margin is ($100 − $60) ÷ $100 × 100 = 40%. A higher margin means more profit kept per sale.
The Profit Margin Calculator helps you measure how much profit you keep from each sale after costs. It is useful for pricing decisions, product comparisons, and business performance tracking.
A clear profit margin helps you avoid underpricing and identify products that contribute most to overall earnings.
How to Use the Profit Margin Calculator
- Enter selling price per unit.
- Enter cost per unit.
- Click calculate.
- Review profit amount and profit margin percentage.
- Test alternate prices to find a sustainable margin target.
Profit Margin Formula
Profit = Selling Price - Cost Price
Profit Margin (%) = (Profit ÷ Selling Price) × 100
Do not confuse margin with markup. Margin uses selling price as the denominator, while markup uses cost.
Practical Examples
Example 1: Retail Product
Selling price is 100 and cost is 70. Profit is 30 and margin is 30%.
Example 2: Margin Target Planning
If your target margin is 40%, you can test different selling prices until the calculator shows the desired percentage.
Common Use Cases
- Setting product pricing.
- Comparing supplier cost changes.
- Monitoring profitability by SKU.
- Preparing monthly business reports.
FAQs
What is a good profit margin?
It depends on industry, competition, and overhead. Compare with your sector benchmarks.
Is profit margin the same as markup?
No. They are related but calculated differently.
Can I use this for services?
Yes. Use service fee as selling price and delivery cost as cost price.
Why is my margin low even with high sales?
High revenue does not guarantee high margin if costs are also high.
Should I track margin regularly?
Yes. Regular tracking improves pricing control and profitability decisions.
Conclusion
The Profit Margin Calculator gives a quick view of pricing efficiency so you can make smarter cost and revenue decisions.