Profit Margin Calculator
Calculate your gross profit margin, markup percentage, and cost ratio. Compare to industry benchmarks instantly.
How to Calculate Profit Margin
Enter Revenue
Input your total revenue or selling price for the period.
Enter COGS
Input your cost of goods sold — the direct cost of producing or acquiring your products.
Get Results
See gross profit, margin %, markup %, and compare to industry benchmarks.
Frequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after subtracting costs. Gross profit margin = (Revenue - COGS) / Revenue × 100. For example, if you sell a product for $100 and it costs $40 to make, your gross margin is 60%. Higher margins mean more profit per dollar of revenue.
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. For example, buying at $40 and selling at $100: margin = 60% (profit/price), markup = 150% (profit/cost). Margin is always lower than markup for the same transaction. Both are useful, but margin is more common in financial analysis.
What is a good profit margin for e-commerce?
E-commerce gross margins typically range from 40-60%. Dropshipping tends to be lower (15-30%), while private label products can achieve 50-70%. Fashion and beauty often have 60%+ margins, while electronics are typically 15-30%. The key is ensuring enough margin to cover operating expenses, marketing, and still be profitable.
How can I improve my profit margin?
To improve margins: (1) negotiate better pricing with suppliers, (2) increase prices if your market supports it, (3) reduce shipping and fulfillment costs, (4) focus on higher-margin products in your mix, (5) reduce waste and returns, and (6) use bundling to increase perceived value while maintaining margins.
What costs are included in COGS?
Cost of Goods Sold (COGS) includes all direct costs to produce or acquire your products: raw materials, manufacturing costs, direct labor, packaging, shipping to your warehouse, and import duties. It does not include indirect costs like marketing, rent, admin salaries, or software subscriptions — those are operating expenses.
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