Calculate your margin
Amounts can be in any currency.
← All calculators
Free calculator
Profit Margin Calculator
Enter revenue and cost of goods sold to see gross profit, gross margin and cost ratio — the same numbers a profit and loss statement shows, calculated in your browser.
How to calculate profit margin
Gross margin is the share of revenue left after the direct cost of what you sold.
The formula
- Gross profit = Revenue − Cost of goods sold
- Gross margin = Gross profit ÷ Revenue × 100
- Cost ratio = Cost of goods sold ÷ Revenue × 100
Revenue of 12,000 with a cost of goods sold of 7,800 gives a gross profit of 4,200. 4,200 ÷ 12,000 is a 35% gross margin, and the cost ratio is 65%.
Profit margin vs markup
Margin divides profit by the selling price; markup divides profit by the cost. The same sale therefore produces two different percentages, and a markup is always the larger number.
A 25% markup on a cost of 80 gives a price of 100, which is a 20% gross margin. A 50% markup gives a 33.3% margin. If you know the margin you want and need the price, use the product pricing calculator.
What this calculator does not include
This is a gross margin calculation. It starts from revenue and cost of goods sold, so rent, salaries, software, payment fees, shipping and tax are not deducted unless you build them into the cost figure. Net margin needs those costs too, which is why a healthy gross margin can still sit above a thin net profit.
Questions
Is profit margin the same as markup?
No. Margin is profit divided by revenue; markup is profit divided by cost. A 50% markup is only a 33.3% margin, so the two numbers should never be used interchangeably.
Does gross margin include overhead?
No. Gross margin stops at cost of goods sold. Rent, wages, marketing and other operating costs come after gross profit, and subtracting them gives operating or net margin.
Can I use any currency?
Yes. The calculator works with the numbers you enter and does not convert them, so revenue and cost simply need to be in the same currency.