Profit Margin Calculator
Calculate gross profit margin percentage and gross profit from revenue and cost. Free business profit margin tool.
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Gross Profit
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Profit Margin —
Net Loss —
How to Use This Calculator
- Enter your Total Revenue — the amount earned from sales.
- Enter your Total Cost (COGS) — the direct cost to produce your goods or services.
- The calculator instantly shows your gross profit and profit margin percentage.
Formula
Gross Profit = Revenue − Cost
Profit Margin (%) = (Gross Profit / Revenue) × 100
Example
A bakery earns $10,000 in monthly revenue. Ingredients and packaging cost $7,000.
- Gross Profit = $10,000 − $7,000 = $3,000
- Profit Margin = ($3,000 / $10,000) × 100 = 30%
Frequently Asked Questions
- Profit margin is the percentage of revenue that remains as profit after deducting the cost of goods sold. It shows how efficiently a business converts revenue into profit.
- A good profit margin varies by industry. Retail typically aims for 2–5%, while software businesses often achieve 20–40%. In general, higher margins indicate stronger financial health.
- Gross Profit Margin (%) = ((Revenue − Cost) / Revenue) × 100. For example, if revenue is $10,000 and cost is $7,000, the margin is 30%.
- Gross profit margin only subtracts cost of goods sold from revenue. Net profit margin also deducts operating expenses, taxes, and interest, giving a fuller picture of profitability.
- Yes. A negative profit margin means costs exceed revenue, resulting in a net loss. This is common in early-stage businesses or during economic downturns.