Profit Margin Calculator

Profit margin vs markup: what's the difference?

These two percentages are often confused but measure different things:

• Margin expresses profit as a percentage of revenue. A 40% margin means you keep $0.40 of every dollar you collect.
• Markup expresses profit as a percentage of cost. A 67% markup means you charged $0.67 more than the item cost you.

Because the denominators differ, the same transaction produces different percentages. A product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup.

How to use the profit margin calculator

Enter your cost (what you paid to produce or acquire the item) and your revenue (what you sell it for). The calculator instantly shows gross profit, margin %, and markup %. Toggle "Include operating expenses" to also compute operating margin, which accounts for ongoing costs like salaries and rent.

What is operating margin?

Gross margin only deducts the direct cost of goods. Operating margin goes further, subtracting operating expenses (payroll, utilities, marketing, etc.) to show how much profit remains from core business operations before interest and taxes.

Operating Margin % = (Revenue − COGS − Operating Expenses) ÷ Revenue × 100

Industry benchmark margins

EBITDA vs. net margin

Profit has multiple layers, each stripping away different costs:

• Gross margin: Revenue − Cost of goods sold (COGS)
• Operating margin: Gross profit − Operating expenses (SG&A, R&D)
• EBITDA margin: Operating profit + Depreciation & Amortization — used to compare companies regardless of capital structure or tax jurisdiction
• Net margin: After interest and taxes — the “bottom line” percentage

Investors use each metric for different purposes: EBITDA for operational comparisons; net margin for shareholder returns.