How to Calculate Profit Margin? Formula, Example & Calculator
Profit margin is calculated using this formula:
Profit Margin (%) = (Selling Price - Cost Price) ÷ Selling Price × 100
In simple terms: It tells you what percentage of your sales is actual profit.
Quick Answer: What is Profit Margin?
Profit margin is the percentage of profit you earn from your selling price. It shows how much money you keep after covering all costs.
Profit Margin Formula Explained
Standard Formula
Profit Margin (%) = (Profit ÷ Selling Price) × 100
Where:
- Profit = Selling Price - Cost Price
Related Search Terms
- how to find profit percentage
- profit margin calculation formula
- gross profit margin formula
- how to calculate margin in business
- selling price vs cost price formula
Step-by-Step: How to Calculate Profit Margin
- Find your Cost Price (CP)
- Determine your Selling Price (SP)
- Calculate Profit = SP - CP
- Apply formula: (Profit ÷ SP) × 100
Example (India Business Use Case)
- Cost Price = ₹80
- Selling Price = ₹150
Profit = ₹70
Profit Margin = 46.67%
Final Answer: Your profit margin is 46.67%
Margin vs Markup
- Markup = Profit ÷ Cost Price
- Margin = Profit ÷ Selling Price
Use Free Profit Margin Calculator
Advanced: Bulk Calculation
👉 Upload CSV & Calculate in Bulk
FAQs
What is profit margin?
Profit margin is the percentage of profit from your selling price.
How do I calculate profit margin?
(Selling Price - Cost Price) ÷ Selling Price × 100
What is a good profit margin in India?
Retail: 10-30%, Food/Café: 50-70%.
Is margin same as markup?
No. Margin is based on selling price, markup on cost price.
How to increase margin?
Reduce costs, improve pricing, optimize operations.
Recommended Reading
If you want to go beyond calculating your profit margin and learn how to build a more profitable business, Profit First by Mike Michalowicz offers a practical approach to managing revenue, expenses, cash flow, and profit. It is a useful next read for small-business owners who want to turn financial numbers into better day-to-day business decisions.
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