Profit Margin Calculator · Practical guide
How to Calculate Gross Profit Margin
Gross profit divided by revenue tells you how many cents of every sales dollar you actually keep.
At a glance
The Formula
Gross profit margin measures what share of revenue survives after direct costs: margin % = (revenue - cost) / revenue x 100. With $200 of revenue and $120 of cost, gross profit is $80 and the margin is 80 / 200 = 40% — forty cents of gross profit per sales dollar. Enter cost and revenue above to get margin, markup, and profit in one step.
Interactive tool
Profit Margin Calculator
Enter your own values, then compare the result with the examples below.
Profit Analysis
Worked Examples
| Revenue | Cost | Gross Profit | Margin | Markup |
|---|---|---|---|---|
| $80 | $50 | $30 | 37.5% | 60% |
| $200 | $120 | $80 | 40% | 66.67% |
| $500 | $350 | $150 | 30% | 42.86% |
| $1,000 | $400 | $600 | 60% | 150% |
Why Margin Can Never Reach 100%
A 100% margin would require zero cost — every revenue dollar kept as profit. Any real cost pushes the margin below 100%, which is why the calculator caps margin inputs at 99.99%. Watch the markup column in the table: as margin climbs from 30% to 60%, markup more than triples from 42.86% to 150%. Small margin gains at the top end require enormous markups.
Gross Margin vs. Net Margin
Gross margin subtracts only the direct cost of what you sold. Net margin goes further, subtracting rent, payroll, marketing, interest, and taxes — a business with a healthy 40% gross margin might net only 5-10%. Use gross margin to judge pricing and product economics; use net margin to judge the whole business. If you know your revenue and target margin but not the allowable cost, enter revenue plus margin above and the calculator solves for the maximum cost you can afford.
Frequently Asked Questions
What is a good gross profit margin?
It varies widely by industry and business model, so there is no single benchmark. The useful first step is computing your own margin precisely, then comparing it across your products and over time.
Is gross margin the same as net margin?
No. Gross margin subtracts only direct costs (cost of goods sold). Net margin also subtracts operating expenses, interest, and taxes, so it is always lower.
Can gross margin be negative?
Yes. If cost exceeds revenue, profit is negative and so is the margin — you lose money on every unit sold.
Why can't margin reach 100%?
A 100% margin would mean zero cost of goods sold. Any positive cost makes profit smaller than revenue, keeping the margin below 100%.