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Profit Margin Calculator - Free Business Calculator | ASK SMB
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Financial

Profit Margin Calculator

Calculate gross profit margin, net profit margin, and profit percentage. Free profit margin calculator for businesses. Instant results with detailed breakdown.

Calculate Your Profit Margin

$

Total sales revenue (before costs)

$

All business costs and expenses

Enter your revenue and costs to calculate profit margin

Understanding Profit Margin

Profit margin is one of the most important financial metrics for any business. It shows what percentage of your revenue becomes profit after all costs are paid. A higher profit margin means your business is more efficient at converting sales into actual profit. Understanding and improving your profit margin is crucial for long-term business success.

Formula

Profit Margin (%) = (Profit ÷ Revenue) × 100

Where:

  • Profit=Revenue minus all costs (Revenue - Costs)
  • Revenue=Total sales or income generated
  • %=Result expressed as a percentage

Example: Online Retail Store

Monthly Revenue:$100,000
Total Costs:$65,000

Profit = $100,000 - $65,000 = $35,000 Margin = ($35,000 ÷ $100,000) × 100

Result:35% profit margin

Tips & Best Practices

  • •Track your profit margin monthly to spot trends and issues early
  • •Compare your margin to industry benchmarks to see how you stack up
  • •Focus on high-margin products and services to maximize profitability
  • •Small cost reductions can significantly improve profit margin
  • •Don't compete only on price - differentiate with value to maintain healthy margins
  • •A 1% improvement in margin can dramatically increase overall profitability
  • •Monitor both gross margin (COGS only) and net margin (all costs) separately

Frequently Asked Questions

Profit margin is a profitability ratio that measures how much profit you make for every dollar of revenue. It is expressed as a percentage and calculated by dividing profit by revenue. A higher profit margin indicates a more profitable business.

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💡 Quick Tips

  • •All calculations happen in your browser - your data is private
  • •Results update in real-time as you type
  • •Export to PDF or share via link
  • •No sign-up required

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