This profit margin calculator estimates profit and gross margin from revenue and cost. It can also compare markup, selling price, and target-margin scenarios for a product or service.
The result is a calculation aid, not a complete business forecast. Taxes, overhead, refunds, discounts, financing, inventory changes, and operating expenses may need separate treatment.
Profit margin is profit expressed as a percentage of revenue. Gross margin commonly uses revenue minus the direct cost of goods or services, divided by revenue.
Markup is different: it expresses profit as a percentage of cost. A 25% markup does not equal a 25% margin because the denominators are different.
Profit = revenue − costUse consistent units and periods. Profit can be positive, zero, or negative.
Margin = profit ÷ revenue × 100Margin uses revenue as the denominator, so the same profit can produce different margins at different sales levels.
Markup = profit ÷ cost × 100Markup uses cost as the denominator and should not be labelled as margin.
For a target margin m written as a decimal, a simple target price is cost ÷ (1 − m), before tax, fees, or other adjustments.
What is the margin when revenue is 100 and direct cost is 60?
What is the markup in the same scenario?
What price gives a 30% margin on a cost of 70?
What happens when revenue is 80 and cost is 100?
How does a discount affect margin?
Does a 40% gross margin mean 40% net profit?
A margin percentage describes the share of revenue remaining after the selected cost. It does not by itself show cash flow, scalability, demand, or business health.
Compare margins only when accounting definitions, product mix, periods, and cost categories are consistent.
Calling markup a margin or using cost instead of revenue as the margin denominator.
Using list price when the actual sale price is lower.
Leaving shipping, returns, payment fees, or direct labour out of direct cost without documenting the choice.
Treating gross margin as net profit after overhead and taxes.
This tool does not provide accounting, tax, investment, pricing, or business advice. It does not validate your cost classification or financial records.
Use consistent accounting definitions and consult an accountant or qualified adviser for reporting, tax, financing, or major pricing decisions.
Margin is profit divided by revenue, multiplied by 100. Profit is revenue minus the selected cost.
Margin divides profit by revenue. Markup divides profit by cost.
Yes. If selected cost is greater than revenue, the result is a loss and the margin is negative.
Only if tax is included in the cost or expense assumption. Label the scenario clearly.
For a simple case, divide cost by one minus the target margin expressed as a decimal.
Use the actual revenue received after the discount when calculating the realized margin.
Definitions vary, but gross margin often uses direct costs. Document whether materials, direct labour, shipping, and production costs are included.
Not necessarily. Volume, cash flow, customer value, competition, risk, and operating costs also affect a business decision.
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