Profit Margin Calculator
Profit margin is a core measure of business profitability. It reflects the percentage of revenue that exceeds expenses. Knowing your margin helps you price products sustainably and evaluate business performance.
Formula & Mechanics
Profit Margin (%) = ((Revenue - Cost) / Revenue) × 100
Gross profit is calculated by subtracting total costs from revenue. Dividing gross profit by total revenue yields the margin percentage.
Worked Step-by-Step Example
Scenario: A product sells for $150 and costs $90 to manufacture.
- Calculate Gross Profit: $150 - $90 = $60
- Divide by Revenue: $60 ÷ $150 = 0.40
- Multiply by 100: 0.40 × 100 = 40%
The profit margin is 40.0%, with $60 profit per unit.
Frequently Asked Questions
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