How to Calculate Profit Margin

Profit formula

Profit = revenue − cost.

Margin formula

Profit margin = profit ÷ revenue × 100.

Example

If you sell something for 100 and it costs 60, profit is 40. The profit margin is 40%.

Margin vs markup

Margin compares profit to selling price. Markup compares profit to cost. They are not the same number.

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