Profit Margin Calculator

Profit Margin Calculator helps businesses analyze their revenues and costs to easily calculate their profit margins.

Profit Margin Calculator formula

The formula for calculating profit margin is the percentage representation of the difference between revenue and cost. It can be expressed as follows:

Profit Margin (%) = [(Revenue - Cost) / Revenue] * 100
In the formula:

• Revenue: Total revenue generated from the product or service.
• Cost: The cost of producing the product or providing the service.

Profit Margin Calculator examples

Below are two detailed examples to help users better understand the concept.

Example 1: Calculating profit margin from product sales

A business sells a product for 500 USD, and the cost of this product is 300 USD. To calculate the profit margin, follow these steps:

1. Find the difference between revenue and cost:
   Revenue - Cost = 500 - 300 = 200 USD
2. Divide this difference by the revenue:
   200 / 500 = 0.4
3. Express the result as a percentage:
   0.4 * 100 = 40%

Result: The profit margin from the product sale is 40%.

Example 2: Calculating profit margin from service delivery

A consultancy firm completes a project for 10,000 USD, and the total cost for this project is 6,000 USD. To calculate the profit margin, follow these steps:

1. Find the difference between revenue and cost:
   Revenue - Cost = 10,000 - 6,000 = 4,000 USD
2. Divide this difference by the revenue:
   4,000 / 10,000 = 0.4
3. Express the result as a percentage:
   0.4 * 100 = 40%

Result: The profit margin from the service delivery is 40%.

Profit Margin Calculator is an essential tool for businesses to measure financial success and make strategic decisions.