Profit Margin Calculator
Calculate gross margin and markup from revenue
Results are estimates and may not reflect your actual financial situation. This is not financial, tax, or legal advice. Consult a qualified professional.
How to use
Use 'From Revenue & Cost' to calculate margin from actual numbers, or 'From Revenue & Margin %' to find the required cost for a target margin. Enter your revenue and cost (or target margin percentage) and the calculator instantly shows gross margin, profit, markup, and cost ratio.
Formula
Examples
SaaS business margin
Monthly revenue of $50,000 with $15,000 in costs yields a 70% gross margin, $35,000 profit, 233.3% markup, and a 30% cost ratio. SaaS businesses typically target 70-80% gross margins.
Retail store margin
Selling a product for $120 that cost $72 gives a 40% gross margin, $48 profit, and 66.7% markup. The cost ratio is 60%, meaning 60 cents of every dollar goes to product cost.
Frequently asked questions
What is the difference between gross, operating, and net margin?
Gross margin uses only the cost of goods sold (COGS). Operating margin subtracts operating expenses (rent, salaries, marketing) from gross profit. Net margin subtracts everything including taxes, interest, and depreciation. This calculator computes gross margin.
What is a good profit margin?
It depends on the industry. Software/SaaS: 70-90% gross margin. Retail: 20-50%. Restaurants: 3-9% net margin. Manufacturing: 25-35%. A 'good' margin means you can cover all operating costs and still be profitable.
How is margin different from markup?
Margin is profit divided by revenue (selling price). Markup is profit divided by cost. For the same transaction, markup is always a higher percentage than margin. A 50% margin equals a 100% markup.
What is cost ratio?
Cost ratio is the percentage of revenue consumed by costs: Cost / Revenue x 100. It is the inverse of gross margin. If your margin is 40%, your cost ratio is 60%. It tells you how many cents of each dollar go to direct costs.
Can I have a margin over 100%?
No. Margin is profit divided by revenue, and profit can never exceed revenue (since cost cannot be negative). Margin ranges from negative infinity (huge losses) to just under 100% (nearly free product). Markup, on the other hand, can be any positive number.
About this tool
Calculate gross profit margin, markup percentage, and cost ratio from revenue and cost. Compare margin vs markup instantly.
All calculations are performed locally in your browser. Your data never leaves your device.