Profit Margin Calculator
Quickly calculate profit, margin percentage, and markup to make better pricing and business decisions.
Calculate Profit Margin
Enter cost and selling price to calculate profit and margin.
Formula
Profit margin shows the percentage of revenue that is profit.
Profit = Selling Price − Cost Price
Understanding Profit Margin
Profit margin is one of the most important metrics in business. It tells you how much of each sale you actually keep after covering costs.
Why profit margin matters
- Helps you price products correctly
- Shows business efficiency
- Highlights profitability issues early
- Allows comparison across products or services
Margin vs Markup
Profit margin is based on selling price, while markup is based on cost. This means a 50% markup does not equal a 50% margin.
Frequently Asked Questions
What is a good profit margin?
It depends on the industry. Retail businesses often operate on lower margins, while services and digital products can achieve higher margins.
Can profit margin be negative?
Yes. If your costs exceed your selling price, you are making a loss.
Why is profit margin important?
It helps you understand whether your business is sustainable and profitable over time.