Profit Margin Calculator

Profit margin shows what share of the selling price is profit after direct cost. For cost £50 and price £80, profit is £30, margin is 37.5%, and markup on cost is 60%.

Margin is the language of promotions and category reviews because it relates profit to customer-facing price. It answers whether a discount still leaves enough on each sale.

Unit-level margin differs from company net margin, which also deducts overheads, tax, and other expenses.

Profit margin % = profit ÷ revenue × 100. It normalises profit against sales size so you can compare periods and products.

Specify whether profit is gross, operating, or net — margin label must match the profit line used.

Link to gross profit calculator, operating margin calculator, and net profit calculator.

Profit = £80 − £50 = £30. Margin = £30 ÷ £80 = 37.5%. Markup = £30 ÷ £50 = 60%.

A 10% discount to £72 cuts profit to £22 and margin to 30.6%. Volume must rise enough to compensate — a common promotion trap.

If cost rises to £55 with price fixed at £80, margin falls to 31.3%. Supplier inflation erodes margin even when shelf price stays unchanged.

Profit £80,000, revenue £200,000 → margin 40%.

If costs rise and profit falls to £60,000 at same revenue, margin 30% — 10 points lost.

Revenue £250,000 with profit £80,000 → margin 32% — growth without margin improvement dilutes percentage.

Use margin when comparing discounted prices, marketplace fees (which are a % of revenue), and category profitability targets stated as margin %.

Use markup when negotiating with suppliers or costing from bill of materials. This calculator shows both from the same inputs.

Margin % = (profit ÷ revenue) × 100. Profit = revenue − relevant costs for the margin type.

Do not compare gross margin to net margin across businesses without labelling.

Margin can improve while absolute profit falls if revenue shrinks faster — watch both.

Investor and lender conversations need labelled margin — gross, operating, or net — every time, not “margin improved” without context.

Deciding whether a discounting volume push is worth it requires margin % on incremental revenue, not only extra units sold.

Benchmarking SKUs or channels only works when each uses the same cost layers and period length.

Price increases where demand is inelastic — test small rises before broad increases.

COGS reduction through suppliers, waste cut, and specification changes.

Mix toward higher-margin product lines and away from loss-leaders unless strategic.

Opex discipline on discretionary spend that does not directly drive sales.

Cut unprofitable segments when contribution and net are both negative after allocated fixed cost.

A business can show 45% gross margin, 12% operating margin, and 6% net margin in the same period — each layer answers a different question. Label which margin you discuss in every meeting.

Volume growth at constant margin percentage still raises absolute profit — but if opex is fixed, operating margin can expand as revenue scales (operating leverage). Model both % and £ profit.

Use operating margin calculator and net profit calculator on the same revenue input when diagnosing where points were lost.

Comparing your net margin to a competitor's gross margin from a summary article — definitions rarely match without reading footnotes.

Reacting to one quarter of margin compression without checking mix shift — selling more of a lower-margin line lowers blended margin even if each line's price held.

Using cash collected in revenue while costs are accrual — margin spikes or dips artificially when timing misaligns.

Report margin type every time — gross, operating, or net — so the team does not optimise the wrong layer.

Track margin and absolute profit together — 30% margin on shrinking revenue still means smaller pounds for investment.

Diagnose drops using gross profit calculator and operating margin calculator on identical revenue inputs.

SaaS and software services often target 60–80% gross and 15–25% net at scale; agencies may run 50–60% gross with 10–20% net when talent is the main cost. Compare to peers in the same model, not to a generic 20% rule of thumb.

Margin targets should include a buffer for bad debt, refunds, and idle capacity — planning at 100% utilisation guarantees disappointment in services.

When margin falls, decide whether the fix is pricing, mix, or cost before cutting growth spend — contribution margin calculator per line clarifies which products to push or prune.

This page should target profit margin calculator, margin calculator, profit from cost and price, markup vs margin, and selling price margin searches.

It calculates profit, profit margin, and markup from cost and selling price. It does not calculate multi-line blended margin, tax-inclusive margin, inventory valuation, price elasticity, or full income-statement profitability.