How it works
margin = (revenue − cost) ÷ revenue × 100profit = revenue − cost
- revenue
- what you sold the item for
- cost
- what the item cost you
- margin
- profit as a percent of revenue
Margin is capped at 100%, since the most you can keep is all of the revenue when cost is zero. That is what separates it from markup, which sits on top of cost and can run past 100% with room to spare.
Frequently asked questions
What is the profit margin on $60 revenue and $40 cost?
33.33%, on $20 of profit.
How do I calculate profit margin?
Subtract cost from revenue, divide by revenue, and multiply by 100.
Is margin the same as markup?
No. Margin measures profit against revenue; markup measures it against cost. The same $20 profit is a 33% margin but a 50% markup.
Can profit margin be over 100%?
No. The base is revenue, so the ceiling is 100%, reached only when the cost is zero.