Margin Calculator

Profit margin is the percentage of revenue that remains as profit after subtracting costs. It is calculated as ((Revenue - Cost) / Revenue) x 100. For example, if you sell a product for $100 and it costs $60, your profit margin is ((100 - 60) / 100) x 100 = 40%.

Margin is based on the selling price (revenue), while markup is based on the cost. For the same transaction, margin is always a smaller percentage than markup. For example, a product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup. Both describe the same profit but from different reference points.

A good profit margin varies by industry. Software companies may have margins of 60-80%, while grocery stores operate on 1-3% net margins. Retail clothing typically sees 4-13% net margin. What matters most is that your margin covers all operating expenses and leaves enough profit to sustain and grow the business.

Gross margin only subtracts the direct cost of goods sold (COGS) from revenue. Net margin subtracts all expenses, including operating costs, taxes, interest, and overhead. Gross margin shows production profitability, while net margin shows overall business profitability. Net margin is always lower than gross margin.