Profit Margin Calculator
Measure how much of your revenue becomes profit after total costs—for a month, quarter, or year.
Calculator
Total sales for the period.
COGS + operating expenses for the same period.
Results
Profit margin
28.00%
Profit
$28,000.00
What this means
Margin at 20%+ gives more cushion. Still industry-dependent—compare against your own cost structure, not a universal “good” score.
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Profit Margin Summary
Profit margin = (Revenue − Costs) ÷ Revenue. It answers how much of each dollar of sales you keep after the costs you include.
Explanation
Profit margin is the percentage of revenue left as profit.
Profit is revenue minus the costs you entered.
Business implication: growing revenue with a falling margin can still destroy cash—watch both.
Step-by-step example
Revenue $100,000, costs $72,000:
- Profit: $100,000 − $72,000 = $28,000
- Margin: $28,000 ÷ $100,000 = 28%
Formula
Profit = Revenue − Costs
Profit margin = Profit ÷ Revenue
Helpful tips
- If margin is under ~15%, unexpected costs can wipe out profits quickly—tighten pricing or costs.
- Compare margin by product line to find what actually funds the business.
FAQ
What is profit margin?
Profit margin is profit divided by revenue. It shows what share of each sales dollar remains after the costs you include for that period.
Should I use all costs or only COGS?
For net-style profit margin, include operating costs as well as COGS. For product economics alone, use the Gross Margin Calculator instead.
What is a good profit margin?
It depends on industry and model. Software can run high margins; retail and services often run lower. Track your trend and compare to peers in your category.
How accurate is this calculator?
It is exact for the revenue and cost totals you enter. Accuracy depends on clean bookkeeping for the same time period.
Related tools
Key terms
Profit margin
Definition. Profit as a percentage of revenue—how much of each sales dollar remains after the costs you include.
In simple terms. Margin answers “is this business (or period) actually profitable?” Define costs the same way every time so comparisons mean something.
Profit margin = profit ÷ revenue (profit = revenue − costs)
Example. $20,000 profit on $100,000 revenue is a 20% profit margin.
Common mistake. Mixing personal draws, one-off investments, and operating costs without labeling what the margin includes.
Related calculators. Profit Margin Calculator, Gross Margin Calculator
Related terms. Gross margin, Break-even, ROI
Gross margin
Definition. Revenue minus cost of goods sold (or direct delivery costs), often shown as a percentage of revenue.
In simple terms. Gross margin shows whether the core offer is priced above direct cost before overhead like rent, software, and marketing.
Gross margin % = (revenue − COGS) ÷ revenue
Example. Sell $10,000 of product with $4,000 COGS → $6,000 gross profit → 60% gross margin.
Common mistake. Stuffing all operating expenses into COGS (or leaving direct labor out) and misreading the business model.
Related calculators. Gross Margin Calculator, Profit Margin Calculator
Related terms. Profit margin, Break-even
Break-even
Definition. The sales level where contribution covers fixed costs—so profit is roughly zero.
In simple terms. Below break-even you lose money; above it, each incremental sale contributes more to profit (within capacity). Useful for pricing and capacity decisions.
Break-even units ≈ fixed costs ÷ (price − variable cost per unit)
Example. Fixed costs $5,000/month, $40 contribution per unit → break-even at 125 units.
Common mistake. Treating all costs as variable, or ignoring that break-even can shift when pricing or mix changes.
Related calculators. Break-Even Calculator
Related terms. Profit margin, Gross margin, Burn rate
Notes & Assumptions
Net margin is a standard financial-statement ratio. Align cost definitions with how you report P&L.
Last reviewed: July 2026