Margin Calculator

What are Revenue, Cost, Margin, Profit, Markup?

Revenue

Total income from sales before any deductions.

Cost

Expenses to produce goods (COGS) or operate business.

Margin

Profitability percentage calculated as Profit / Revenue.

Profit

Financial gain after deducting costs:
Gross Profit = Revenue - COGS
Net Profit = Gross Profit - Operating Expenses

Markup

Price increase over cost:
Markup = (Selling Price - Cost) / Cost × 100%

How to calculate profit margin?

Formula

Profit Margin = (Net Profit / Revenue) × 100%

Steps

1. Calculate total revenue (e.g., $120)
2. Subtract all expenses (COGS + operating costs + taxes)
   Example: 120 - 85 = $35
3. Divide net profit by revenue: $35 / $120 = 0.29
4. Convert to percentage: 0.29 × 100 = 29%

How to calculate gross profit margin?

Formula

Gross Margin = [(Revenue - COGS) / Revenue] × 100%

Steps

1. Identify COGS (e.g., $30)
2. Identify revenue (e.g., $50)
3. Calculate gross profit: $50 - $30 = $20
4. Divide by revenue: $20 / $50 = 0.4
5. Convert: 0.4 × 100 = 40%

How to calculate revenue with known cost and profit margin?

Formula

Revenue = Cost / (1 - Target Margin)

Steps

1. Convert target margin % to decimal (e.g., 40% → 0.4)
2. Subtract from 1: 1 - 0.4 = 0.6
3. Divide cost by result: $30 / 0.6 = $50
4. Verify: ($50 - $30)/$50 = 40%

FAQs

Q: Difference between margin and markup?
A: Margin = Profit/Revenue | Markup = Profit/Cost

Q: Can margin exceed 100%?
A: No. Profit is always ≤ Revenue.

Q: Which is better: margin or markup?
A: Margin shows true profitability. Markup focuses on pricing strategy.

Q: Difference between margin and markup?
A: Margin is % of revenue, markup is % added to cost