What percentage of revenue remains after the entered cost?

Profit margin measures profit against revenue, not against cost. That denominator is why margin and markup produce different percentages even when they describe the same sale.

Defining profit as a share of revenue

Enter total revenue and the cost associated with producing it. The difference is gross profit, and dividing that profit by revenue gives the profit margin.

Markup uses cost as its base instead, while the cost ratio shows the share of revenue consumed by cost. This is why markup and margin are not interchangeable.

How price and cost move the percentage

A higher selling price raises revenue and profit when cost is unchanged, while a higher cost reduces both profit and margin. A negative margin means the entered cost exceeds revenue.

Revenue minus cost, then divided by revenue

Gross profit = Revenue − CostProfit margin = (Gross profit ÷ Revenue) × 100

Reading margin from one sale

The default example subtracts cost from revenue to find profit, then divides that profit by revenue. It keeps the currency result beside the margin percentage.

Profit margin40%
Gross profit$400.00
Markup66.67%
Cost as share of revenue60%

Gross, operating and net margin labels

Do not call the result net margin unless the cost input truly includes every expense required for a net-profit calculation.

  • Revenue and cost cover the same units and reporting period.
  • The cost field includes only the costs the user intends to measure.
  • Tax and overhead are excluded unless included in the entered cost.

Calculations related to profit margin

The following tools examine neighbouring parts of the same calculation without changing the inputs or assumptions used above.

Quick answers

Frequently asked questions

What is the difference between margin and markup?

Margin divides profit by revenue, while markup divides profit by cost.

Can profit margin be negative?

Yes. Margin is negative when cost is greater than revenue.

Should I enter gross or net revenue?

Enter the revenue figure that matches the margin you want to measure: gross revenue before returns and discounts for a gross sales view, or net revenue after those deductions for a net sales view. Keep the cost figure on the same basis.

Educational content only. This guide is not financial advice.