Profit Margin Calculator

Profit margin is profit divided by revenue, where profit is revenue minus costs.

Quick answer

Profit margin is profit divided by revenue, where profit is revenue minus costs. With the default inputs (Revenue $120,000, Costs $78,000, Target margin 30%) the result is Gross profit $42,000, Current margin 35%, Revenue for target $111,429.

Method

Gross profit = revenue - costs. Current margin = gross profit / revenue x 100. Revenue for target = costs / (1 - target margin / 100).

Margin is a share of revenue, while markup is a share of cost; a 30% margin is a 42.9% markup, so do not mix the two when setting prices.

Worked example

Revenue	$120,000
Costs	$78,000
Target margin	30%
Gross profit	$42,000
Current margin	35%
Revenue for target	$111,429

Assumptions and limits

"Costs" should include every cost you want the margin to reflect; the tool does not separate cost of goods from operating expenses.
A target margin of 100% or more has no solution in this formula, and the tool shows 0 for that field.

Educational estimate only. It is not financial, tax, legal, or investment advice.

FAQ

How do I calculate profit margin?

Subtract costs from revenue, divide by revenue and multiply by 100. With the defaults ($120,000 revenue, $78,000 costs) the margin is 35%.

What revenue do I need for a target margin?

Divide costs by (1 - target margin). With the defaults and a 30%% target you need $111,429.

What is the difference between margin and markup?

Margin is profit as a percentage of revenue; markup is profit as a percentage of cost. The same price gives a higher markup than margin.

What is gross profit here?

Revenue minus the costs you entered. With the defaults it is $42,000.

Is my data stored?

No. The calculation runs in your browser and the inputs are not sent to or saved by this site.