Calculate profit margin from cost and revenue, with markup shown alongside.
Profit margin
40%
$40.00 profit on $100.00 revenue
Formula
(100 − 60) ÷ 100 × 100 = 40%
What this assumes
From cost and price
The usual starting point
60Price for a target margin
Work backwards from the margin you want
40Thin margins
Typical of retail
95Cost and revenue, or a cost and a target margin — the tool solves for whatever is missing.
Both are shown for the same figures, which makes the difference between them unmistakable.
Working from a target margin gives the selling price you actually need to charge.
They are computed from the same profit but different denominators. Seeing both prevents the pricing mistake that quietly erodes profitability.
Whichever two figures you have, the third follows — no rearranging formulas by hand.
A margin of 100% or more cannot exist, since profit cannot exceed the selling price. The tool explains rather than returning a nonsense number.
Enter any two of cost, revenue or margin and the tool works out the rest. Crucially it shows the markup at the same time, because margin and markup are different measures of the same profit and confusing them is the most expensive arithmetic error in small business pricing. A 50% markup produces a 33.3% margin — price to "50% profit" using markup and you will earn a third less than you intended.
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