Free Profit Margin Calculator
Calculate your product's profit margin instantly with our comprehensive tool. Make informed pricing decisions and optimize your business profitability with AI-powered insights.
Profit Margin Calculator
Calculate your product's profit and margin percentage
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Profit Margin Calculator
Calculate your profit margins and optimize pricing strategies for maximum profitability.
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What is Profit Margin and Why is it Critical?
Profit margin is one of the most important financial metrics for any business. It represents the percentage of revenue that exceeds the cost of goods sold (COGS), giving you a clear picture of how much money you keep from each sale after covering direct costs.
Industry standards vary significantly, but most successful retail businesses aim for gross profit margins between 20-50%, while service-based businesses often achieve higher margins due to lower direct costs.
Profit Margin Formula
Result expressed as a percentage
Healthy Profit Margins by Industry
Retail/E-commerce
Varies by product category and competition level
Professional Services
Higher margins due to expertise-based value
Manufacturing
Lower margins offset by higher volume
Frequently Asked Questions
What is a good profit margin?
It varies by industry, but 20% or higher is often considered good for retail, while services can achieve 50-80%.
Can profit margin be negative?
Yes, if your cost exceeds your selling price, you have a negative margin, indicating a loss on each sale.
Is profit margin the same as markup?
No, markup is based on cost (profit ÷ cost), while margin is based on selling price.
What's the difference between gross and net margin?
Gross margin only considers direct costs; net margin includes all expenses like overhead, taxes, and interest.