Profit Margin Calculator
Calculate gross profit, profit margin, markup, and cost share with the WealthCalcLab profit margin calculator.
Updated April 5, 2026
What this calculator does
This profit margin calculator helps you separate profit, margin, and markup so pricing decisions are based on the right metric.
Margin and markup are often confused in practice, which leads to mispriced products and inaccurate profitability discussions.
A simple breakdown makes it easier to explain gross economics across teams, especially in sales, finance, and operations.
How to use it
Enter revenue and the direct cost associated with generating that revenue.
Use gross profit for absolute contribution and margin for percentage-based pricing comparisons.
Check markup separately if your pricing process starts from cost rather than target revenue.
Formula
Profit = Revenue - CostMargin = Profit ÷ RevenueMarkup = Profit ÷ CostMargin and markup use different denominators, which is why they produce different percentages from the same numbers.
Methodology
Gross profit equals revenue minus cost.
Profit margin equals profit divided by revenue. Markup equals profit divided by cost.
Cost share is shown to highlight how much of revenue is consumed by cost before any overhead or tax is considered.
Worked example
A product with 2,500 in revenue and 1,600 in direct cost creates 900 in gross profit. Margin and markup will not be the same percentage.
That difference matters when teams negotiate discounts or set target pricing rules.
How to interpret the results
Margin helps compare sales efficiency across products or channels. Markup helps assess pricing built from a cost base.
A low margin may still be viable if turnover is high, but the calculator gives you a clean starting point for the conversation.
Common mistakes
- Using markup targets when the business actually manages on margin.
- Ignoring overhead, tax, or financing costs when interpreting gross economics.
- Treating revenue and cash collected as the same thing.
Key terms
Quick definitions for the finance terms that matter on this page.
Profit margin
Profit expressed as a share of revenue.
Markup
Profit expressed as a share of cost.
Frequently asked questions
Clear answers on assumptions, interpretation, and the limits of each estimate.
Why are margin and markup different?
Because margin is based on revenue while markup is based on cost.
Does this include overhead?
No. This is a gross profit calculator unless you explicitly include overhead in the cost figure.
Can margin be negative?
Yes. If cost exceeds revenue, profit and margin will both be negative.
Should tax be included in revenue?
Usually no if tax is collected on behalf of the government rather than earned as revenue.
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Important disclaimer
Philippines figures are planning estimates only. Confirm local rates, lender disclosures, tax rules, and legal treatment with official sources before acting.