Business calculators
Profit Margin Calculator
Find the percentage of revenue left after covering costs. Your inputs stay in this browser.
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What this calculator measures
Profit margin shows how much revenue remains after the costs included in the calculation. Owners use it to review pricing and compare profitability across products or periods.
Revenue and cost must cover the same scope. Direct costs produce a gross-style margin; including operating costs produces a broader operating result.
Formula
Worked example
- 1Revenue is $10,000 and cost is $6,500.
- 2Profit is $10,000 - $6,500 = $3,500.
- 3$3,500 / $10,000 x 100 = 35% margin.
How to interpret the result
A higher margin leaves more room for overhead and shocks, but a workable level depends on volume and business model.
Common mistakes and limits
- Mixing periods, omitting relevant costs, confusing margin with markup, or treating accounting profit as available cash.
Frequently asked questions
Can margin be negative?
Yes. Cost above revenue produces a negative margin.
Why must revenue exceed zero?
Revenue is the denominator, so a zero value makes the percentage undefined.
Is margin the same as markup?
No. Margin divides profit by revenue; markup divides it by cost.