Profit Margin Calculator: Net Profit, Margins & Cost Ratios

Determine exact net profit and profit margin percentage from revenue and total costs. Accurately detect losses and analyze cost breakdown ratios.

Enter Calculation Values

Gross sales receipts or price charged before any cost deductions.
$
Direct product costs, shipping, advertising, or operating overhead.
$
Format selector only. No foreign exchange conversion is applied.

Calculation Results

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Net Profit / Loss
$35.00
  • Profit Margin: 35.00%
  • Cost Ratio (Cost / Revenue): 65.00%

How Profit Margin is Calculated

Profit margin expresses the proportion of sales revenue retained as profit after covering all incurred expenses.

Profit = Revenue - Total Cost
Profit Margin (%) = (Profit / Revenue) × 100
Cost Ratio (%) = (Total Cost / Revenue) × 100
Worked Example: If your company produces $100.00 in revenue and incurs $65.00 in total costs:
1. Net Profit = $100 - $65 = $35.00
2. Margin = ($35 / $100) × 100 = 35.00%
3. Cost Ratio = ($65 / $100) × 100 = 65.00%

Important Difference: Margin vs. Markup

While profit margin divides profit by selling price / revenue, markup divides profit by cost. If an item costs $50 and sells for $100, the markup is 100%, but the profit margin is only 50%. See our comprehensive guide on Profit Margin vs Markup.

Frequently Asked Questions

Can a profit margin be negative?

Yes. When total costs exceed revenue, the company operates at a net loss, yielding a negative profit margin.

Can profit margin exceed 100%?

Under normal business accounting, revenue represents total price, so margin cannot exceed 100% unless costs are negative. High margins typically reach 80%–90% in software and digital goods.

What is a good profit margin for small businesses?

Across industries, a 10% net profit margin is considered average, 20% is healthy, and 5% is low. Retailers often operate on 3%–8%, while consulting services can exceed 30%.

Related Calculators & Resources

  • Markup Calculator — Calculate percentage markup on cost, examine the corresponding profit margin, or input target markup to solve for required retail selling price.
  • Break-Even Calculator — Find the minimum sales volume and revenue required to balance fixed overhead and per-unit variable costs.
  • Product Pricing Calculator — Solve for the exact retail selling price needed to hit your target profit margin after deducting manufacturing, packaging, shipping, and payment processing fees.

Helpful Reading

Learn more about strategic pricing in our guide: Business Pricing Masterclass.