Profit Margin Calculator
Calculate profit and profit margin from revenue and total cost, with cost share and support for negative results.
Profit margin and cost share are not applicable when revenue is $0 — dividing by zero has no meaningful percentage. Profit is still shown above.
What is profit margin?
Profit margin measures how much of your revenue is left over as profit after subtracting your total cost, expressed as a percentage. It answers a different question than the raw profit amount: two businesses can earn the same dollar profit while having very different margins, depending on how much revenue it took to produce that profit.
This calculator is a general-purpose margin tool: use it for a single sale, a product line, or a whole period of revenue and cost, as long as "total cost" consistently includes everything you want netted out of revenue for that calculation.
Formula
- Profit = Revenue − Total cost
- Profit margin % = Profit ÷ Revenue × 100
- Cost as % of revenue = Total cost ÷ Revenue × 100
Revenue and total cost must use the same currency and cover the same scope (for example, both for one sale, or both for one month) — the calculator does not adjust for mismatched scopes.
Margin percentage vs profit amount
A high margin percentage does not always mean a large profit amount, and a low margin does not always mean a small one. A $10 profit on $20 of revenue is a 50% margin; a $10,000 profit on $1,000,000 of revenue is only a 1% margin. Both the percentage and the dollar figure are useful, and they answer different questions: margin shows efficiency relative to revenue, while the profit amount shows total value created.
Why margin varies by industry
Typical margins differ widely by industry because cost structures differ widely: a grocery retailer with high volume and thin markups may run a low single-digit margin, while a software business with low marginal delivery cost may run a much higher one. This calculator deliberately does not state a "good" or "bad" margin, since there is no single benchmark that applies across industries, business models, and stages of growth.
How discounts and cost increases affect margin
Because margin is profit divided by revenue, a discount that lowers revenue without a matching reduction in cost lowers margin faster than it lowers profit in percentage terms. Similarly, a cost increase that is not passed on to the selling price reduces profit directly and reduces margin further, since revenue stays the same while the numerator (profit) shrinks. Re-running this calculator with adjusted revenue or cost figures is a quick way to see the effect of a proposed discount or cost change before committing to it.
Worked example
Consider a product with:
- Revenue = $50,000
- Total cost = $35,000
Profit = $50,000 − $35,000 = $15,000
Profit margin = $15,000 ÷ $50,000 × 100 = 30%
Cost as % of revenue = $35,000 ÷ $50,000 × 100 = 70%
Use the “Load example” button above to load this exact scenario into the calculator.
Negative profit and negative margin
When total cost exceeds revenue, profit is negative and profit margin is also negative — for example, $8,000 revenue against $10,000 total cost gives a profit of −$2,000 and a margin of −25%. This calculator supports and displays negative results without adjustment, since a negative margin is a factually meaningful (if undesirable) outcome, not an error state.
Result interpretation and limitations
The profit margin shown here is a planning figure based only on the revenue and total cost you enter. It does not apply any specific accounting standard, does not separate fixed from variable cost, and does not account for taxes, refunds, or timing differences between when revenue is recognized and when cost is incurred. This tool is not accounting, tax, legal, or financial advice — confirm any figures used for financial reporting with a qualified professional.
Related pricing calculators
Profit margin is closely related to two other pricing metrics on this site: the Markup Calculator, which measures profit relative to cost instead of revenue, and the Gross Margin Calculator, which applies the same margin formula specifically to revenue and cost of goods sold (COGS) at the product-line level. For a fuller comparison with worked examples and a conversion table, see the Profit Margin vs Markup guide.
Frequently asked questions
What is profit margin?
Profit margin is the percentage of revenue left over as profit after subtracting total cost. It is calculated as profit divided by revenue, multiplied by 100. This is sometimes called a margin calculator or a business margin calculator.
How do you calculate profit margin?
Profit = Revenue - Total cost. Profit margin % = Profit / Revenue x 100. This calculator also shows total cost as a percentage of revenue, so you can see both sides of the split at once.
What is the difference between profit margin and profit amount?
Profit amount is a dollar (or other currency) figure; profit margin is that amount expressed as a percentage of revenue. A large profit amount can come with a small margin, and a small profit amount can come with a large margin, depending on how much revenue was required to produce it.
Is there a universally good profit margin?
No. Typical margins vary widely by industry, business model, and company stage, so this calculator does not label any margin as universally good or bad. Compare your result against your own historical figures, budget, or a dated, sourced benchmark for your specific industry.
Can profit margin be negative?
Yes. When total cost exceeds revenue, profit is negative and profit margin is also negative. This calculator displays negative results without adjustment, since a negative margin is a factually meaningful outcome, not an error.
What happens if revenue is $0?
Profit is still calculated as the negative of total cost, but profit margin and cost share are mathematically undefined at $0 revenue (division by zero), so this calculator reports them as not applicable rather than an invalid or infinite number.