What you keep,after what it cost.
Profit margin is the share of every sale you actually keep once cost is paid. It's the number that decides whether revenue means anything, a business doing millions at a 2% margin is more fragile than one doing thousands at 60%. Enter your revenue and cost to see your profit, your margin, and your markup, and finally settle the margin vs markup confusion that quietly mis prices half of all products.
Your numbers
What you sell it for, per unit or total.
What it cost you to produce or deliver, same basis as revenue.
The verdict
Profit
$60
Gross margin
60.0%
Markup
150.0%
Profit as a % of cost.
Cost ratio
40.0%
Share of revenue that is cost.
Of every dollar of revenue
The trap · markup is not margin
What each markup actually leaves you
| Markup | Resulting margin | Keep per $100 sale |
|---|---|---|
| 20% | 16.7% | $17 |
| 50% | 33.3% | $33 |
| 75% | 42.9% | $43 |
| 100% | 50.0% | $50 |
| 150% | 60.0% | $60 |
| 200% | 66.7% | $67 |
A 50% markup is only a 33% margin — the gap that quietly mis-prices half of all products. Markup is on cost; margin is on price. Quote and report in margin: it's the money you actually keep.
Your move
Healthy margins give you room. Marketing turns that room into growth.
60.0% gross margin ($60 profit) — a 150.0% markup.
A strong margin means you can afford to acquire customers aggressively, most businesses just don't know how to spend it well. That's my job: turning the headroom your margin gives you into profitable, scalable growth. Send me your numbers and I'll show you, free, where the money's leaking and what I'd fix first.
Plain English
Revenue is vanity. Margin is sanity.
Profit margin is gross profit (revenue minus cost) expressed as a percentage of revenue. Sell something for $100 that cost you $40, and your profit is $60, a 60% margin. It's the single most revealing number in a business, because it tells you how much of every dollar of sales survives to cover your overheads, your marketing, and ultimately your pocket. Two companies with identical revenue and wildly different margins are not in the same situation at all.
Margin matters most for the decisions stacked on top of it. Your margin sets the break even ROAS you need from ads, the discount you can survive, and the headroom you have to acquire customers. A 70% margin business can spend aggressively to win customers and absorb a bad month; a 15% margin business has almost no room for error. Knowing the number turns gut feel pricing and ad spend into something you can actually plan around.
And then there's the trap: margin and markup are not the same, and confusing them costs real money. Markup is profit as a percentage of cost; margin is profit as a percentage of price. A 50% markup is only a 33% margin. Price using markup but report in margin (or vice versa) and you'll consistently under earn without knowing why. This calculator shows both from the same inputs so you always know which lens you're looking through.
The formula
Margin % = (revenue − cost) ÷ revenue × 100 · Markup % = (revenue − cost) ÷ cost × 100
Revenue $100, cost $40 → profit $60. Margin = 60 ÷ 100 = 60%. Markup = 60 ÷ 40 = 150%. Same sale, two very different looking percentages. If a supplier says 'I added 50% markup,' the margin is only 33%, knowing the difference is the difference between pricing right and pricing broke.
Typical gross margins by sector
Rough 2025 gross margin ranges. They vary enormously by model, so use them to gut check whether yours leaves enough room to grow, not as a target:
| Sector | Typical gross margin |
|---|---|
| Software / SaaS | 70 to 90% |
| Agencies / services | 40 to 60% |
| E-commerce / DTC | 30 to 50% |
| Retail | 20 to 40% |
| Food & beverage | 20 to 40% |
| Manufacturing | 25 to 35% |
Source: Gross margin benchmarks by sector · 2025
Your margin is thinner than it should be. Why?
Margin in single digits.
You have almost no room for marketing, mistakes, or a downturn. Raise prices, cut cost of goods, or shift mix toward higher margin products before chasing more volume.
Healthy markup but thin margin.
You're being fooled by the markup vs margin gap. A 30% markup is only a ~23% margin. Re price using margin so the number you target is the number you keep.
Margin fine, but no profit overall.
Your gross margin is healthy but overhead is eating it. The problem is operating costs, not pricing, look below the gross line.
Discounting heavily.
Discounts come straight off margin, not revenue. A 20% discount on a 40% margin item wipes out half your profit. Model the real cost before you run a sale.
Margin varies wildly by product.
You're probably over investing in low margin sellers. Push marketing and attention toward your high margin lines and prune the rest.
How to widen your margin
01Raise prices before you cut costs
A price increase flows almost entirely to profit. Even a few percent, tested on new customers, often moves margin more than months of cost cutting.
02Know your break even on every promotion
Discounts and free shipping are paid for out of margin. Calculate the real cost of each offer before you run it, not after.
03Shift the mix to high margin lines
Bundle, upsell, and feature your best margin products. Selling more of what already pays well beats squeezing the thin stuff.
04Attack cost of goods, not just price
Renegotiate suppliers, buy at better volumes, or re engineer the product. Every dollar off COGS is a dollar onto profit.
05Use margin to set your ad ceiling
Your margin defines the most you can spend to acquire a customer and stay profitable. Price the margin first, then build the ad budget on top.
06Report in margin, price in margin
Pick one language, margin, and use it everywhere. The markup vs margin mix up is one of the most common silent profit leaks in small business.
The vocabulary
- Gross profit
- Revenue minus the direct cost of producing the goods or service (COGS). The raw money a sale generates before overheads.
- Profit margin
- Gross profit as a percentage of revenue. How much of each sales dollar you keep.
- Markup
- Profit as a percentage of cost. Always a bigger number than the equivalent margin, and a common source of pricing errors.
- COGS
- Cost of goods sold, the direct costs to make or deliver what you sell. Excludes overheads like rent and salaries.
- Net margin
- Profit after all costs (including overheads and tax) as a percentage of revenue, lower than gross margin.
Profit margin questions, straight answers
Subtract cost from revenue to get gross profit, then divide by revenue and multiply by 100. So revenue of $100 with $40 of cost gives $60 profit and a 60% margin. This calculator does it instantly and also shows the markup percentage from the same numbers.
Keep going
A calculator tells you what. A call tells you what to do about it.
Send me the account behind these numbers. I'll tell you straight where the money's leaking and what I'd fix first — free, and you keep it whether you hire me or not.