Percentage Calculator
Percentage of a number, percentage change, percentage difference and add/subtract a percentage.
Profit Margin Calculator
Enter revenue and costs to see gross profit, operating profit, net profit and each margin. A second tab works backwards from a target margin to the selling price.
Use the Profit Margin Calculator
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How to use the Profit Margin Calculator
- Enter revenue and cost of goods sold (COGS).
- Add operating expenses and other costs if you want operating and net margin.
- Review the profit amounts, margins and markup.
- Switch to the price tab to find the selling price that delivers a target margin.
About this tool
Margin and markup are often confused. Margin is profit as a share of the selling price; markup is profit as a share of cost. A product costing 100 and sold for 150 has a 33.3% margin but a 50% markup. Pricing from markup when you meant margin is a common way to under-price.
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Track stock and profit in Excel
The Inventory & Sales Tracker template tracks stock levels with reorder alerts, profit on every sale, and your top products and monthly sales. It works in Excel 2010 or later.
Profit margin formulas
| Measure | Formula |
|---|---|
| Gross profit | Revenue − cost of goods sold (COGS) |
| Gross margin | Gross profit ÷ revenue × 100 |
| Operating profit | Gross profit − operating expenses |
| Net profit | Operating profit − tax, interest and other costs |
| Markup | Gross profit ÷ cost × 100 |
| Price for a target margin | Cost ÷ (1 − margin ÷ 100) |
Worked example
A shop has Rs 500,000 in monthly sales, Rs 350,000 in stock costs, Rs 80,000 in rent and salaries, and Rs 20,000 in other costs.
| Measure | Amount (Rs) | Margin |
|---|---|---|
| Gross profit | 150,000 | 30% |
| Operating profit | 70,000 | 14% |
| Net profit | 50,000 | 10% |
A 30% gross margin may look healthy, but only 10% of sales remain as profit. That's why it helps to track all three figures.
Margin and markup are different
Margin compares profit with the selling price, while markup compares profit with the cost. Mixing them up is one of the most common pricing errors.
| Margin you want | Markup needed |
|---|---|
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
How to price a product for a target margin
Suppose an item costs Rs 700 and you want a 30% margin. The price is 700 ÷ (1 − 0.30) = Rs 1,000, which leaves Rs 300 in profit.
A common mistake is to add 30% to the cost instead. That gives Rs 910, and your profit of Rs 210 is only a 23.1% margin. Use the Price from target margin tab to avoid this.
What is a good profit margin?
There's no single answer. Grocery and distribution businesses often run on thin margins and rely on volume, while services and software can have much higher ones. The most useful comparisons are your own past results and businesses in your sector.
Ways to improve your margin
- Check which products make the most profit, not just the most sales.
- Negotiate supplier costs or buy in better quantities.
- Review discounts, as a small discount can remove a large share of your profit.
- Track wastage, returns and delivery costs, which are easy to overlook.
For quick discount and growth figures, use the Percentage Calculator. To check whether your team is on track, try the Sales Target Calculator.
Frequently asked questions
What is a good profit margin?
It depends heavily on the industry, scale and business model, so compare against similar businesses rather than a universal number.
What is the formula for gross margin?
(Revenue − COGS) ÷ Revenue × 100.
How do I price a product for a 30% margin?
Divide cost by (1 − 0.30). A cost of 70 gives a price of 100.
How do I calculate profit margin?
Subtract your costs from revenue, divide by revenue and multiply by 100. With Rs 500,000 in sales and Rs 350,000 in stock costs, gross margin is 30%.
What is the difference between margin and markup?
Margin is profit as a share of the selling price, and markup is profit as a share of the cost. A 50% markup equals a 33.3% margin.
How do I set a price for a 30% margin?
Divide your cost by 0.70. An item costing Rs 700 needs a price of Rs 1,000.
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