Profit Margin Calculator
Turn revenue and cost into the numbers that matter: gross profit, profit margin and markup.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Revenue (selling price)
- $100
- Cost of goods
- $60
$40 profit on $100 of revenue
- Gross profit$40
- Profit margin40.0%
- Markup66.7%
How the profit margin changes with revenue (selling price)
Holding the other inputs at the example above, here is how the result moves as revenue (selling price) changes.
| Revenue (selling price) | Profit margin | Gross profit |
|---|---|---|
| $80 | 25.0% | $20 |
| $100 | 40.0% | $40 |
| $150 | 60.0% | $90 |
| $250 | 76.0% | $190 |
The math behind it
Gross profit is revenue minus the cost of goods. Profit margin is that profit divided by revenue, expressed as a percent — profit as a share of the selling price. Markup is the same profit divided by cost instead of revenue, so it is always the larger number when there is a profit. The cost ratio is cost divided by revenue.
Assumptions & limits
- This is gross margin on a single sale or product — it uses only revenue and cost of goods, not overhead, payroll, or taxes.
- Net margin, which subtracts all operating expenses, is lower than the gross margin shown here.
- Margin and markup are computed from the same profit but different denominators, so they are never equal above breakeven.
- Enter revenue and cost in the same terms (per unit, per order, or per period) for the percentages to be meaningful.
Common questions
What is the difference between margin and markup?
Both start from the same gross profit, but the base differs. Margin is profit divided by the selling price; markup is profit divided by cost. A product bought for $60 and sold for $100 has a $40 profit — that is a 40% margin but a 67% markup. Confusing the two is a common pricing mistake that quietly erodes profit.
Is this gross margin or net margin?
Gross margin. It counts only revenue minus the cost of goods. Net margin goes further and subtracts every other cost — rent, salaries, marketing, interest, taxes — so it is always lower. Use gross margin to judge product-level pricing and net margin to judge whether the whole business makes money.
What is a good profit margin?
It depends heavily on the industry. Grocery and retail run on thin single-digit margins by moving volume, while software and consulting can clear well above 50%. Rather than chase a universal number, compare your margin to peers in your sector and track whether it is holding or slipping over time.