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Profit Margin Calculator

The Profit Margin Calculator estimates profit or loss and expresses it as a percentage of sales revenue. It is useful for a simple review of product, service, or business performance when revenue and corresponding costs are known.

How to use this calculator

  1. Enter sales revenue for the period or group of sales.
  2. Enter the corresponding total costs.
  3. Review the absolute profit or loss.
  4. Review profit margin as a percentage of revenue.

Profit margin formula

Profit = revenue − costs; profit margin = (profit ÷ revenue) × 100.

  • Revenue must be greater than zero to calculate a meaningful profit-margin percentage.
  • Costs greater than revenue produce a loss and a negative margin.
  • Use costs and revenue from the same accounting period and scope.

Worked examples

Positive margin

Revenue is €1,000 and costs are €750.

Profit = €250; margin = €250 ÷ €1,000 × 100 = 25%.

The profit margin is 25%.

Understanding the result

Margin uses revenue as the denominator, while markup uses cost as the denominator.

This simple result does not automatically include costs omitted from the amount entered.

Important notes

Include the costs appropriate to the margin you want to measure.

For formal reporting, use definitions consistent with your accounting method.

Frequently asked questions

How is profit margin different from markup?

Profit margin divides profit by revenue; markup divides profit by cost.

Can profit margin be negative?

Yes. If costs exceed revenue, the result is a loss and margin is negative.

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Related explanations

Learn the method behind the number or compare the terminology before using the calculator.

  • How to Calculate ROI — Learn the return on investment formula and how to interpret profit, cost, and percentage return.
  • How to Calculate Break-Even Point — Learn the break-even formula for units and revenue and understand fixed costs, price, and variable costs.
  • Markup — Learn what markup means, how markup is calculated from cost and selling price, and how it differs from margin.

This page provides a calculation tool plus explanatory information so you can understand what the result means and when the underlying method may not fit your situation.

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