Profit Margin Calculator

What is a Profit Margin Calculator?

A profit margin calculator helps you determine how profitable your business or product is based on revenue and costs. It calculates profit, profit margin (as a percentage of revenue), and markup (as a percentage of cost)—essential metrics for pricing, budgeting, and financial analysis.

How Profit Margin Calculations Work

Basic Formulas

Profit = Revenue - Cost

Profit Margin = (Profit ÷ Revenue) × 100

Markup = (Profit ÷ Cost) × 100

Example

• Revenue: £1,000
• Cost: £600
• Profit: £1,000 - £600 = £400
• Profit Margin: (400 ÷ 1,000) × 100 = 40%
• Markup: (400 ÷ 600) × 100 = 66.67%

Profit Margin vs Markup

Profit Margin

• Expressed as a percentage of revenue
• Answers: “What percentage of each sale is profit?”
• Used for financial reporting and comparisons

Markup

• Expressed as a percentage of cost
• Answers: “How much more am I charging than my cost?”
• Used for pricing decisions

Example: A 50% margin means 50% of revenue is profit. A 50% markup means you add 50% to the cost to get the price.

How Our Calculator Works

1. Enter revenue: Total sales or selling price
2. Enter cost: Total cost of goods or cost price
3. Get results: Profit, profit margin %, and markup % instantly

Industry Benchmarks

Industry	Typical Margin
Retail	2-5%
Restaurants	3-6%
Software	70-90%
Consulting	25-50%
Manufacturing	10-20%

Frequently Asked Questions

What is a good profit margin?

It depends on the industry. A 10-20% net profit margin is typical for many businesses. Software and SaaS often have higher margins (70%+). Retail and grocery have lower margins (2-5%).

What’s the difference between profit margin and markup?

Profit margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. A 50% margin means half of revenue is profit. A 50% markup means you add 50% to cost to get the price.

How do I calculate selling price from cost and desired margin?

Use: Selling Price = Cost ÷ (1 - Margin ÷ 100). For example, cost £60 with 40% margin: £60 ÷ 0.60 = £100 selling price.

What is gross vs net profit margin?

Gross profit margin uses revenue minus cost of goods sold. Net profit margin deducts all expenses (operating, taxes, etc.). Our calculator shows gross profit margin.