Your business figures
This calculator provides a simple gross margin estimate. It does not include tax, overheads, financing costs or other business expenses unless they are included in the cost you enter.
How profit margin is calculated
Profit margin shows what percentage of revenue remains after subtracting the cost.
Profit Margin (%) = (Revenue − Cost) ÷ Revenue × 100
Markup is different. It compares profit with the cost rather than with the selling price.
Markup (%) = (Revenue − Cost) ÷ Cost × 100
Worked example
If an item sells for £100 and costs £60, the gross profit is £40. The profit margin is 40%, while the markup is approximately 66.67%.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost.
Can profit margin be negative?
Yes. If cost is higher than revenue, the calculator will show a negative margin, indicating a loss.
Does this include VAT?
Only if the numbers you enter already include VAT. For clearer business analysis, use figures on a consistent basis.