Profit Margin Calculator
Profit margin tells you how much of every rupee you earn stays in the business after covering costs. A shop that books ₹10 lakh in sales and spends ₹6 lakh keeps 40 paise of every rupee — that is its profit margin. This calculator turns revenue and cost into profit, margin percentage and markup, so you can price products, compare months or judge whether a discount is worth taking.
Enter values
Results
- Profit margin
- 40%
- Profit
- ₹4,00,000.00
- Markup on cost
- 66.67%
- Cost as a share of revenue
- 60%
How is the Profit Margin calculated?
Enter the revenue — the sales value before any deductions — and the total cost of delivering those sales: cost of goods, staff and other overheads. Subtracting cost from revenue gives profit in rupees. Dividing that profit by revenue gives the margin as a percentage, while dividing it by cost gives markup. The calculator reports all three at once, and handles losses too: when costs exceed sales the margin comes back negative.
Formula
Profit = Revenue − Cost. Profit margin = (Revenue − Cost) ÷ Revenue × 100. Markup = (Revenue − Cost) ÷ Cost × 100. Revenue is the sales value of what you sold and cost is what it took to deliver it. Margin is measured against sales, markup against cost, so markup is always the bigger number: a 40% margin equals a 66.67% markup.
Example
A bakery sells ₹10,00,000 worth of cakes in a month. Ingredients, staff and packaging cost ₹6,00,000. Profit is 10,00,000 − 6,00,000 = ₹4,00,000. Margin = 4,00,000 ÷ 10,00,000 × 100 = 40%. Markup = 4,00,000 ÷ 6,00,000 × 100 = 66.67%. The bakery keeps 40 paise of every rupee of sales, and prices its goods 66.67% above what they cost to make.
Things to remember
Compare your margin with others in your industry rather than with another industry: 10% can be healthy for a grocer and poor for a software company. The calculator treats every cost you enter as variable, so fixed rent and loan payments still have to be covered out of the margin it reports.
Frequently Asked Questions
What is a good profit margin for a business?
It depends on the industry. Retail groceries often run 1–3% net margin, restaurants 3–9%, services 10–20% and software 20% or more. Compare your number with the average for your sector and watch the trend month to month — a falling margin warns you long before profits turn into losses.
What is the difference between margin and markup?
Margin is profit as a percentage of sales; markup is profit as a percentage of cost. A product that costs ₹600 and sells for ₹1,000 earns a ₹400 margin (40% of sales) and a 66.67% markup (of cost). Markup is always the larger of the two numbers.
How do I work out a 40% margin from cost?
Divide the cost by (1 − target margin). A ₹600 product must sell for ₹600 ÷ 0.60 = ₹1,000 to reach a 40% margin. In the calculator, set cost to ₹600 and adjust revenue until the margin reads 40%.
Does profit margin include tax and interest?
Not here — this calculator subtracts only the costs you enter. Add interest and tax to the cost line for an operating or net margin, or enter only cost of goods sold when you want the gross margin of a product.
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