How the calculation works
Profit margin % = ((Revenue − Cost) ÷ Revenue) × 100
Worked example
If revenue is $100 and cost is $60, profit is $40 and profit margin is 40%.
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Profit amount
$40
Profit margin
40%
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost, so the percentages are not interchangeable.
Which costs should I include?
Use the costs relevant to your decision. Product margin often starts with cost of goods, while net business margin includes a much wider set of expenses.
Can margin be negative?
Yes. If cost is higher than revenue, the calculated profit and margin are negative.
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