📐 Math
Margin Calculator
Enter your cost and revenue to see your profit margin and profit amount.
📝 Your Assumptions
Calculate your profit margin from cost and selling price. Profit margin is the percentage of revenue that becomes profit after subtracting the cost of goods sold. Enter your cost and your selling price to see your margin percentage and profit amount — essential for pricing decisions, product analysis, and business planning.
How to Use This Calculator
Two numbers in, profit margin out.
1
Enter your cost
Type what you paid to acquire or produce the item in the "Cost" field. Include landed cost — manufacturing, shipping, and any direct expenses.
2
Enter your revenue
Type the selling price in the "Revenue" field. This is what the customer pays you, before any discounts, taxes, or fees.
3
Read your profit margin
The primary output shows the margin as a percentage: (revenue − cost) ÷ revenue × 100. For cost 60, revenue 100, the margin is 40%.
4
Check your profit amount
The second output shows the raw dollar profit: revenue − cost. For the example above, profit is $40.
5
Test pricing scenarios
Change the revenue to see how different selling prices affect your margin. Raising the price from 100 to 120 lifts the margin from 40% to 50%.
What Your Results Mean
Margin is the language of business pricing. Here is what your numbers tell you.
Profit Margin
The percentage of revenue that becomes profit. Formula: (revenue − cost) ÷ revenue × 100. A 40% margin means 40 cents of every dollar is profit.
Profit
The raw dollar amount left after subtracting cost from revenue. Same units as your inputs — dollars, euros, etc.
Margin vs. Markup
Margin uses revenue as the base. Markup uses cost as the base. A $60 cost sold for $100 is a 40% margin but a 66.67% markup. Same transaction, different numbers.
Typical Margins by Industry
Grocery stores: 1–3%. Restaurants: 5–15%. Retail: 20–50%. Software: 70–90%. Services: 40–70%. Higher margins usually mean less competition or more differentiation.
Margin vs. Gross Margin
Our calculator computes gross margin (revenue minus direct cost). Net margin also subtracts operating expenses, taxes, and interest — a lower number.
Why Margin Matters
Margin tells you how much room you have for overhead, marketing, and profit. A 5% margin business needs huge volume to survive. A 40% margin can absorb mistakes.
Key Terms
Profit Margin
The percentage of revenue that becomes profit after subtracting cost. Formula: (revenue − cost) ÷ revenue × 100.
Cost (COGS)
Cost of Goods Sold — the direct cost of producing or acquiring the item. Excludes overhead, marketing, and administrative expenses.
Revenue
The total amount received from a sale. Also called the selling price or gross revenue.
Profit
Revenue minus cost. The absolute dollar amount earned on a single sale.
Markup
The percentage added to cost to arrive at selling price. Uses cost as the base, unlike margin which uses revenue. Formula: (revenue − cost) ÷ cost × 100.
Gross Margin
Revenue minus cost of goods sold, divided by revenue. The most common margin metric for evaluating a product line.
❓ Frequently Asked Questions
Margin uses revenue (selling price) as the base: (revenue − cost) ÷ revenue × 100. Markup uses cost as the base: (revenue − cost) ÷ cost × 100. A $60 cost sold for $100 gives a 40% margin but a 66.67% markup. Same dollars, different percentages. Retailers often talk in markup; accountants and investors usually talk in margin. Confusing the two is one of the most common pricing mistakes — a "50% margin" and a "50% markup" are very different prices.
It depends heavily on industry. Grocery and discount retail run on 1–3% margins. Restaurants typically operate at 5–15%. Traditional retail averages 20–50%. Software and SaaS companies can hit 70–90%. Professional services land around 40–70%. A "good" margin is one that covers your overhead, taxes, and growth investments while leaving a healthy profit. Public company data from the S&P 500 shows median net margins around 10%, but that is after all expenses — gross margins are much higher.
Subtract cost from selling price to get profit, then divide by selling price and multiply by 100. Example: cost $60, sell $100. Profit = $40. Margin = 40 ÷ 100 × 100 = 40%. This calculator does both steps instantly. Just make sure your "cost" includes landed cost (product + shipping + duties) and your "revenue" is the actual selling price after any discounts you offer regularly.
Yes. A negative margin means you are selling below cost. For example, cost $100, sell $80 gives a margin of −20%. This happens during clearance events, loss-leader promotions, or when a business is trying to gain market share. Some companies intentionally run negative margins on certain products to drive traffic to higher-margin items. But sustained negative margins without a strategic reason will bankrupt a business — our calculator will show the negative clearly so you can evaluate.
Three levers: raise price, lower cost, or both. Raising price from $100 to $110 on a $60 cost lifts margin from 40% to 45.5%. Negotiating cost down from $60 to $50 lifts margin to 50% at the same price. Bundling products or adding high-margin add-ons also raises blended margin. The easiest wins usually come from modest price increases (customers rarely notice 5–10%) and cost renegotiation. Use this calculator to model each scenario before you commit.
No. Profit is a dollar amount — the absolute money left after subtracting cost. Margin is a percentage — profit divided by revenue. If you sell 100 items at a 10% margin and 1 item at a 50% margin, the first sale might generate more total profit. Profit tells you "how much," margin tells you "how efficient." A business needs both: healthy margins for sustainability and enough volume for meaningful total profit. Use our calculator to see both numbers together.
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