-Calc

Profit margin measures how much of each sale you actually keep. Take what you sold something for, subtract what it cost you, and divide the result by what you sold it for. That’s it — no spreadsheet required.

1. What it cost you$30Cost of goods sold
2. What you sold it for$50Revenue
3. What you kept$20$50 − $30 = profit
4. As a share of the sale40%$20 ÷ $50 = margin

Switch to the Calculator tab, change any one of those numbers, and watch the other two update in real time.

Any two of cost, margin, revenue, and profit determine the other two. Here are all five equations the Calculator tab is running:

profit  = revenue − cost
margin  = 100 × profit / revenue
revenue = cost / (1 − margin / 100)
revenue = 100 × profit / margin
cost    = revenue − margin × revenue / 100

Pick whichever pair you already know. If you know cost and margin, the third formula gives you revenue. If you know profit and margin, the fourth gives you revenue instead — cost then falls out of the first equation.

“Margin,” “gross margin,” and “profit margin” get used interchangeably in most conversations, and on this page. They all mean the same calculation: profit divided by revenue. If someone specifically means net margin — profit after every expense, not just the cost of the product — they’ll usually say “net.”

“Cost” here means cost of goods sold (COGS): what it actually took to produce or acquire whatever you sold. It doesn’t include your rent, your salary, or your ad spend — those come out of gross profit later, which is exactly why gross margin and net margin are different numbers.

Margin and markup answer different questions with the same profit number. Same $20 profit, two different percentages, depending on which number you divide by.

markup % = margin % / (100 − margin %) × 100
margin % = markup % / (100 + markup %) × 100

Markup is always the bigger number for a profitable sale, because it’s dividing by cost instead of revenue, and cost is smaller. Mixing the two up is the single most common pricing mistake there is.