Profit Margin Calculator

Work out your gross profit and profit margin from revenue and costs.

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About this calculator

Profit margin tells you what percentage of your revenue is left as profit after costs. It is the single most useful health check for a product, a service line or a whole business: two companies with identical revenue can have wildly different margins, and it is the margin — not the turnover — that pays your wages.

Enter your revenue and your total costs and this calculator returns your profit, your profit margin and the equivalent markup, so you can compare pricing conversations that use either convention.

The formula

Profit = Revenue − Costs Profit margin (%) = (Profit ÷ Revenue) × 100 Markup (%) = (Profit ÷ Costs) × 100

Worked example

You sell a consulting package for £5,000 and it costs you £3,500 to deliver (your time, software, subcontractors).

Profit = £5,000 − £3,500 = £1,500
Profit margin = £1,500 ÷ £5,000 × 100 = 30%
Markup = £1,500 ÷ £3,500 × 100 = 42.9%

Common mistakes

Confusing margin with markup — a 30% margin is not a 30% markup on cost.
Forgetting hidden costs such as payment fees, your own time, and software subscriptions.
Comparing gross margin against competitors' net margin — make sure you compare like with like.

Frequently asked questions

It varies by industry. Many service businesses target 30–50% gross margin, retailers often run at 20–40%, and grocery runs on single digits. Compare against your own sector, not a universal number.

Gross margin only subtracts the direct costs of delivering the product or service. Net margin also subtracts overheads, tax and interest — it is always lower.

Your costs are higher than your revenue, so you are making a loss on each sale. Either raise the price, reduce the cost, or stop selling that line.

Assumptions & limitations

All figures should be in the same currency and exclude VAT for a like-for-like comparison. The calculator treats the cost figure you enter as the complete cost — it does not add tax, fees or overheads for you.

Sources & verification

This calculator applies the standard formula published above to the figures you enter — it relies on no external statutory data. The formula and the worked example were checked by hand against each other.

Formula last verified: 24 July 2026

Maintained by: Steve Davis, Founder & Editor — see our editorial standards

Spotted an error or an out-of-date figure? Report it — corrections are prioritised over all other work (see our corrections policy).