Profit Margin Calculator

What this tool can do

Calculate profit margin from revenue and total costs. Convert markup into an equivalent profit margin. Calculate selling price from cost and target margin. Calculate allowable cost from selling price and target margin. Calculate margin and price from cost and target profit.

Formula and methodology

Profit = revenue − costs. Margin = profit ÷ revenue × 100.

Worked example

On €10,000 revenue and €6,000 costs, profit is €4,000, margin is 40%, and markup is 66.67%.

What profit margin measures

Profit margin shows the share of revenue left after the costs included in the calculation. A 40% margin means 40 cents of every revenue euro remains as profit before any omitted costs, taxes, or fees.

Profit margin and markup are different

Margin divides profit by revenue. Markup divides profit by cost. The same sale can therefore have a 40% margin and a 66.67% markup, so the percentages should not be used interchangeably.

Choose costs that match the decision

Use costs from the same product, project, or accounting period as the revenue. Include every cost relevant to the decision, and keep excluded overhead, tax, payment fees, or discounts in mind when interpreting the result.

Set a price from a target margin

To find a selling price, divide cost by one minus the target margin as a decimal. A 40% target margin on €60 of cost requires a €100 selling price, not €84.

Privacy

Calculations and draft documents run in your browser. Entered values are not included in FollowIncome analytics events.

Next step

Use the result as a planning aid, then track actual invoices, payments, expenses and projects in FollowIncome.

Frequently asked questions

What is the formula for profit margin?

Subtract total costs from revenue to get profit, then divide profit by revenue and multiply by 100. Revenue must be greater than zero for a margin percentage.

How do I convert markup to margin?

Divide the markup percentage by 100 plus the markup percentage, then multiply by 100. For example, a 50% markup is a 33.33% margin.

Does this calculator include tax or payment fees?

Only when you include them in the cost entered. The calculator does not infer taxes, processor fees, discounts, or jurisdiction-specific accounting treatment.

Are the values I enter stored?

The calculation runs in your browser. FollowIncome analytics record the tool and interaction type, not the revenue, cost, target, currency amount, or calculated result.

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