Last updated
Profit Margin Calculator
Profit margin
Gross profit margin from revenue and cost: (revenue − cost) ÷ revenue. Markup uses cost as the denominator.
On this page (tap to expand)
Profit margin formula
Profit margin = (revenue − cost) ÷ revenue. A £100 sale that cost £60 is a 40% margin. Markup on the same numbers is 66.7% because markup divides by cost, not revenue.
Example: Product price £80, unit cost £50 → profit £30, margin 37.5%, markup 60%. Use the same VAT basis on both inputs.
Calculations follow the documented formula on this page; rounding and input units can change the last digit—treat outputs as educational estimates unless you reconcile with source systems.
* This is an estimate. Actual amounts may vary slightly based on input assumptions.
What this calculator does
- Profit Margin Calculator
- Calculate margin from revenue and cost.
Don’t confuse with markup (÷ cost). Margin speaks to investors; markup speaks to buyers comparing keystone retail rules.
Gross profit margin from revenue and cost: (revenue − cost) ÷ revenue. Markup uses cost as the denominator.
Inputs on this page: Revenue, Cost. Assumptions stay visible so you can reproduce the figure elsewhere.
When to use it
- Use Profit Margin Calculator when you need a transparent profit margin answer before you commit numbers to a spreadsheet, invoice, or conversation.
- Reach for it when you already know (or can estimate) Revenue and want the dependent result without rebuilding the formula by hand.
- Skip it when you need certified advice, signed-off payroll, or a lender’s official quote—those require the primary institution’s systems.
Key takeaways
- Variable vs fully-loaded cost changes the story - be consistent.
- Discounts erode margin nonlinearly - 10% off needs more volume math.
- Compare SKU-level margins; blended averages hide dogs.
How to use this tool
- 1Enter your values into the fields.
- 2Click calculate or convert.
- 3Copy or use the result instantly.
Guides and explainers
Long-form walkthroughs that pair well with this calculator. When you need narrative context beyond the live fields, start here and return to the tool to plug in your own numbers.
Margin vs Percentage: What's the Difference? (2026)
Margin and percentage are often confused. Learn the exact difference with real examples, formulas, and when to use each. Free calculator included.
Read guide →Marketplace seller fees: Stripe, PayPal, Etsy, and eBay (2026)
Model percent plus fixed Stripe and PayPal fees, Etsy listing and stacked percents, and eBay final value sketches with honest limits. Link to ROI vs ROAS and margin guides on Toollabz.
Read guide →Beyond break-even: contribution margin and the profit path people skip (2026)
Explain contribution margin after break-even, variable cost creep, links to break-even article/calculators, profit margin, ROI, employee loaded cost guide, freelance pricing, business hub.
Read guide →Employee loaded cost: what a seat really costs before you price work (2026)
Explain salary vs loaded seat cost, benefits and overhead percents, contractor comparisons, links to employee cost calculator, break-even articles, meeting cost, freelance pricing, and business hub.
Read guide →
Practical scenarios
Retailers, product sellers, and operators use this to turn a price and a cost into a margin percentage before they quote. It is also the page to check when someone says “we need 40%” and you need to know whether they mean margin or markup.
Continue in the Business & SaaS tools collection or the glossary. Related calculators in this session: Markup Calculator, Break-even Calculator, ROI Calculator, VAT Calculator, Invoice Generator, Invoice Late Fee Calculator (Simple Interest).
Related definitions
Key formula explained
How the calculation works
The Formula
Margin% = ((Revenue - Cost) / Revenue) × 100- Revenue: the value you enter for revenue.
- Cost: the value you enter for cost.
| This tool | Margin% = ((Revenue - Cost) / Revenue) × 100 |
|---|---|
| Related intent: profit margin | See paired tools for profit margin-each page documents its own core relationship next to the live form. |
| Related intent: profit margin calculator | See paired tools for profit margin calculator-each page documents its own core relationship next to the live form. |
Core relationship for Profit Margin Calculator:
Margin% = ((Revenue - Cost) / Revenue) × 100
Worked check: Sell at $84, make for $51 → margin = (84−51)/84 ≈ 39.3%; markup would be 33/51 ≈ 64.7%.
Related calculations
Keep the same assumptions and open a neighbor calculator when your question branches: Markup Calculator, Break-even Calculator, ROI Calculator, VAT Calculator. Each page documents its own formula beside the fields.
Learning links: Methodology · Editorial policy · Glossary
Worked real-world example
Product price £80, unit cost £50 → profit £30, margin 37.5%, markup 60%. Use the same VAT basis on both inputs.
Re-enter the same numbers in the calculator above to confirm the page math matches the interactive result.
Who uses this tool?
Retailers, product sellers, and operators use this to turn a price and a cost into a margin percentage before they quote. It is also the page to check when someone says “we need 40%” and you need to know whether they mean margin or markup.
Common mistakes
- Confusing margin with markup is the classic pricing mistake: 40% margin is not 40% markup. Margin divides profit by revenue; markup divides profit by cost, so the same GBP 40 profit can produce very different percentages.
- Leaving indirect costs out of the cost field can make a weak product look healthy. Rent, staff time, payment fees, packaging, returns, and marketplace commissions may belong in cost when you are checking real business margin.
- Comparing VAT-exclusive revenue with VAT-inclusive costs creates a false margin. Keep all inputs on the same VAT basis before you quote the percentage.
References & sources
Official references for context. Calculator outputs are planning estimates—confirm material decisions with the primary authority or a qualified professional. See our methodology and editorial policy.
- Toollabz methodology — How we document formulas and update pages
- Companies House (UK)
- SBA — Business guide (US)
Content last updated 2026-07-18
FAQs
Click a question to expand the answer.
What is the profit margin formula?
Profit margin = (revenue − cost) ÷ revenue, shown as a percentage. A sale of 100 with cost 60 is a 40% margin. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
What is the difference between margin and markup?
Margin divides profit by revenue. Markup divides the same profit by cost. 40% margin on those numbers is 66.7% markup. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
Is this gross or net profit margin?
This calculator uses the two fields on the form: revenue and cost. If cost is only COGS, the result is a gross-style margin. Add operating costs to cost if you want a closer net-style figure. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
Can I use this as a product margin calculator?
Yes. Enter the selling price as revenue and the unit cost as cost for a single product, or totals for a batch. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
Does this replace accounting software?
No. It is a planning formula. Confirm inventory costing and tax treatment in your books. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
What does Profit Margin Calculator calculate in plain English?
Margin % = (price − cost) ÷ price - how much of each dollar you keep before overhead. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
Can you show a worked example for Profit Margin Calculator?
Sell at $84, make for $51 → margin = (84−51)/84 ≈ 39.3%; markup would be 33/51 ≈ 64.7%. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
What are the most important tips when using Profit Margin Calculator?
Variable vs fully-loaded cost changes the story - be consistent. Discounts erode margin nonlinearly - 10% off needs more volume math. Compare SKU-level margins; blended averages hide dogs. For Profit Margin Calculator, keep the inputs you used beside the result so the number can be checked later. The documented formula is Margin% = ((Revenue - Cost) / Revenue) × 100, and small changes to rates, rounding, dates, tax rules, regional assumptions, or percentage bases can change the final profit margin result. Treat the output as a planning reference and confirm high-stakes decisions against official guidance or source systems.
Next step
Open the full directory, browse your hub collection, or jump back to this category. Bookmark the page if you use it often.
Built and maintained by Imtiaz Ahmad
Founder and lead engineer | Content updated July 18, 2026
See methodology and editorial policy.