How to calculate profit margin

Subtract the cost price from the selling price to find the profit. Divide the profit by the selling price and multiply by 100.

Example:
Cost price = $60
Selling price = $100

Profit = $100 − $60 = $40
$40 ÷ $100 × 100 = 40%

Profit = $40
Profit margin = 40%

​

When would you use profit margin?

Profit margin shows how much of your sales revenue remains as profit after costs have been deducted. It is useful for comparing products, checking business performance and deciding whether your selling price is generating enough profit.

​

For example, if a product sells for $100 and costs $70, the profit is $30. The profit margin is therefore 30%.

​

Important: Profit margin and markup are not the same thing. Margin is calculated from the selling price, while markup is calculated from the cost price.

​

Related calculation: Need to calculate profit based on the cost price instead? Use our Markup Calculator.