Margin Calculator Classic
Calculate profit margin, revenue, cost, and profit for your business
Calculate Profit Margin
Select which values you know, and we'll calculate the rest
Cost of Goods Sold
Selling price
Revenue - Cost
Profit margin percentage
Calculation Results
Formulas Used
Profit: Revenue - Cost = $50.00 - $30.00 = $20.00
Margin: (Profit / Revenue) × 100 = ($20.00 / $50.00) × 100 = 40.00%
Markup: (Profit / Cost) × 100 = ($20.00 / $30.00) × 100 = 66.67%
Margin Analysis
Key Insights
Example Calculations
Example 1: Calculate Margin from Cost & Revenue
Given: Cost = $30, Revenue = $50
Calculation:
• Profit = $50 - $30 = $20
• Margin = ($20 / $50) × 100 = 40%
Result: 40% profit margin, $20 profit
Example 2: Calculate Revenue from Cost & 20% Margin
Given: Cost = $100, Desired Margin = 20%
Calculation:
• Revenue = $100 / (1 - 0.20) = $100 / 0.80 = $125
• Profit = $125 - $100 = $25
Result: Sell at $125 for 20% margin
Example 3: Calculate Cost from Revenue & 30% Margin
Given: Revenue = $200, Margin = 30%
Calculation:
• Profit = $200 × 0.30 = $60
• Cost = $200 - $60 = $140
Result: Max cost is $140 for 30% margin
Margin Benchmarks
Quick Formulas
Margin = (Profit / Revenue) × 100
Profit = Revenue - Cost
Revenue = Cost / (1 - Margin/100)
Markup = (Profit / Cost) × 100
Margin Tips
Higher margins provide cushion for expenses and errors
Margin varies significantly by industry
Focus on net margin, not just gross margin
Margin ≠ Markup (they use different denominators)
Monitor margins regularly to spot trends
Understanding Profit Margin
What is Profit Margin?
Profit margin is the percentage of revenue that represents profit. It shows how much of each dollar in sales actually becomes profit after accounting for the cost of goods sold (COGS). A higher margin means your business retains more profit from each sale.
Why Margin Matters
- •Indicates business health and sustainability
- •Helps set competitive pricing strategies
- •Provides buffer for unexpected costs
- •Essential metric for investors and lenders
Margin vs Markup
Margin: Profit as % of selling price (revenue)
Markup: Profit as % of cost
Example: If cost is $80 and selling price is $100:
• Profit = $20
• Margin = 20% ($20/$100)
• Markup = 25% ($20/$80)
Important: Margin is always less than markup for the same product. Understanding this difference prevents pricing errors.
Industry Margin Averages
Retail
Typically 2-5% net margin, 20-50% gross margin
Software/SaaS
Often 70-90% gross margin, 15-25% net margin
Restaurants
Usually 3-6% net margin, 60-70% gross margin
Manufacturing
Varies widely, 5-20% net margin typical
Professional Services
Often 10-20% net margin, 40-60% gross margin
E-commerce
Typically 0-5% net margin, 30-50% gross margin