Profit Margin Calculator
Find out how much profit your business makes from its revenue. Calculate net profit or loss and understand your profit margin in seconds.
Calculate Your Profit Margin
Enter your revenue and total business costs below.
Your Results Will Appear Here
Enter your revenue and costs, then select Calculate to see your net profit and profit margin.
What Is Profit Margin?
Profit margin is a financial metric that shows how much of a business's revenue remains as profit after expenses are deducted. It is expressed as a percentage of revenue.
A higher profit margin generally means a business keeps more money from each dollar of sales. A negative profit margin means the business is spending more than it earns. The result depends on which expenses you include in the total costs field.
Gross Profit Margin vs. Net Profit Margin
Gross profit margin measures the profit remaining after subtracting direct costs associated with producing or purchasing the goods or services sold. It does not include operating expenses such as marketing, rent, or administrative costs.
Net profit margin measures the profit remaining after all relevant business expenses have been deducted from revenue. These may include direct costs, operating expenses, employee expenses, marketing, interest, and taxes.
This calculator calculates profit margin using the total costs you enter. For a net profit margin estimate, include all relevant business expenses, such as direct costs, operating expenses, employee expenses, marketing, interest, and applicable taxes. The calculator does not automatically separate or calculate gross and net profit margins.
Profit Margin Formula
Net Profit = Revenue − Total Costs
Example of Profit Margin Calculation
Suppose your business generates $10,000 in revenue. Your direct product costs are $4,000, while operating expenses, employee expenses, and marketing costs total another $2,500.
- Revenue: $10,000
- Direct Costs: $4,000
- Other Business Expenses: $2,500
- Total Costs: $6,500
- Net Profit: $10,000 − $6,500 = $3,500
- Net Profit Margin: ($3,500 ÷ $10,000) × 100 = 35%
In this example, the gross profit is $6,000, giving a gross profit margin of 60%. After the additional $2,500 in business expenses, the estimated net profit is $3,500 and the net profit margin is 35%.
Frequently Asked Questions
How do I calculate profit margin?
Subtract total costs from revenue to get net profit. Then divide net profit by revenue and multiply by 100 to get the profit margin percentage.
What is a good profit margin?
A good profit margin depends on the industry, business model, operating costs, and market conditions. Compare your margin with businesses in the same industry for a more useful benchmark.
Can profit margin be negative?
Yes. If total costs are higher than revenue, net profit becomes a loss and the profit margin is negative.
What is the difference between profit margin and markup?
Profit margin measures profit as a percentage of revenue, while markup measures profit as a percentage of the cost of a product or service.