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Profit Margin Calculator
Use this profit margin calculator to turn revenue and cost of goods sold into gross profit and margin percentage.
Profit Margin Calculator
Enter your numbers and the result updates straight away.
Outputs
Planning estimate only. Verify assumptions before making a financial decision.
If revenue is $32,000 and cost of goods sold is $19,200, gross profit is $12,800 and profit margin is 40%.
How this calculation works
Gross profit equals revenue less cost of goods sold. Gross margin divides gross profit by revenue; markup divides the same gross profit by cost. If a target margin is entered, the calculator solves price or revenue as cost ÷ (1 − target margin). It does not infer which costs belong in COGS.
How to interpret the result
Margin and markup use different denominators and are not interchangeable. Compare results only when revenue recognition and cost classification are consistent. Gross margin does not include operating expenses, financing, tax, cash timing, or returns and discounts omitted from the inputs.
Limitations
Results are educational planning estimates. They do not include every tax, legal, accounting, financing, or business-specific consideration and are not professional advice.
Sources and further reading
Formula and example
If revenue is $32,000 and cost of goods sold is $19,200, gross profit is $12,800 and profit margin is 40%.
Common use cases
- Measure gross profit and gross margin.
- Convert between margin and markup.
- Calculate revenue required at a target margin.
- Evaluate cost or price changes.
- Compare product, customer, or channel economics.
Profit Margin Calculator FAQ
What is gross profit?
Gross profit is revenue minus cost of goods sold before operating expenses, taxes, or financing costs.
What is profit margin?
Profit margin shows what percentage of revenue remains after direct costs.
Can costs be higher than revenue?
Yes. That produces a negative gross profit and a negative margin, which the calculator shows.
Why does revenue need to be greater than zero?
Margin percentage uses revenue as the denominator, so revenue must be above zero.
Why is a 50% markup only a 33.3% margin?
A $100 cost marked up by 50% sells for $150. The $50 gross profit is 50% of cost but only 33.3% of revenue.
Which costs belong in COGS?
Use the accounting policy appropriate to the business and apply it consistently. Product, freight, direct labor, fulfillment, and platform costs may be classified differently across businesses.
Can gross margin exceed 100%?
Not with nonnegative revenue and cost. Negative or unusual accounting entries require analysis beyond this simplified calculator.