Profit Margin Calculator

Business

Profit margin shows how many paise of every rupee of sales you actually keep — enter your revenue and cost to see net profit, margin and markup at a glance.

In short: The Profit Margin Calculator is a free online tool that lets you work out net profit, profit margin and markup from your revenue and cost — instantly, with charts, a worked example and the exact formula.

Your inputs

Net profit margin

30%

Net profit

₹30,000

Markup

42.86%

profit over cost

Revenue, cost and profit

How much of your revenue is cost and how much is profit.

Profit breakdown

Profit breakdown
Metric	Amount
Revenue	₹1,00,000
Cost	₹70,000
Net profit	₹30,000

Net profit is revenue left over after all costs are deducted.

Formula

Profit = Revenue − Cost • Net margin = Profit / Revenue × 100 • Markup = Profit / Cost × 100

Revenue: Selling price or total sales
Cost: Total cost to earn that revenue
Profit: Revenue minus cost

Step-by-step calculation

Worked with the default values.

1
Net profit
₹1,00,000 − ₹70,000
= ₹30,000
2
Net profit margin
Profit ÷ Revenue × 100
= 30%
3
Markup
Profit ÷ Cost × 100
= 42.86%

How it works

Net profit is simply revenue minus every cost that went into earning it.
Net margin expresses that profit as a percentage of revenue — how much of each rupee of sales you keep.
Markup expresses the same profit as a percentage of cost — how much you added on top of what you paid.

Examples

Selling for ₹1,00,000 with ₹70,000 of cost

₹30,000 profit → a 30% net margin and roughly 42.9% markup.

A ₹500 product that costs ₹300 to make

₹200 profit → a 40% net margin and about 66.7% markup.

Understanding the Profit Margin Calculator

What profit margin really measures

Profit margin is the single most revealing number about a sale. It answers a simple question: of every rupee that comes in, how much do you actually keep? A business selling for ₹1,00,000 against ₹70,000 of cost earns ₹30,000 of profit — a 30% net margin. That percentage, not the raw rupee figure, is what lets you compare a small order with a large one, this month with last, or your shop with a competitor.

Net profit = Revenue − Cost
Net margin = Profit ÷ Revenue × 100
Markup = Profit ÷ Cost × 100

Margin versus markup

The most common pricing mistake is confusing margin with markup. Both describe the same profit, but against different bases. Margin divides profit by the selling price; markup divides the same profit by the cost. Because cost is the smaller number, markup always looks bigger. A ₹200 profit on a ₹500 item that cost ₹300 is a 40% margin but a 66.7% markup. Quoting the wrong one to a supplier or customer can quietly cost you money, which is why this calculator shows both.

Setting prices that hold up

Margin is not just a report-card number — it is a pricing tool. Decide the margin you need to cover overheads and earn a return, then work backwards to the selling price. In thin-margin trades like retail and FMCG, even a 5% cut in cost can transform the bottom line, while service and software businesses often defend 30-40% margins. Always judge your figure against others in the same industry; comparing a grocery store's margin with a software firm's is meaningless.

Reading margin honestly

A healthy-looking margin can still mislead. A blended, business-wide figure hides which products lose money and which carry the rest. High margins on tiny volumes may earn less than modest margins on large ones, so read margin alongside sales volume. Keep GST out of both revenue and cost — it is a pass-through tax, not income — and be consistent about which costs you include. Used carefully, profit margin becomes the fastest gauge of whether a sale, a product or a whole business is truly worth the effort.

Pros

Turns raw revenue and cost into an instant, comparable percentage.
Shows margin and markup side by side, ending the classic pricing confusion.
Works for a single product, an order or a whole business.
Helps set prices that clear a target return before you commit.
Requires just two numbers to reveal the health of a sale.

Cons

A single blended figure hides which products are actually profitable.
Excluding some costs inflates the margin and paints too rosy a picture.
It ignores volume, so a high margin on tiny sales can still mean low profit.
It is a snapshot and says nothing about trends or cash flow timing.

Tips

1Compute margins product-by-product to spot loss-makers hidden in an average.
2Always compare your margin with peers in the same industry, not across sectors.
3Keep GST out of both revenue and cost so the margin reflects real earnings.
4Track margin over time — a slow slide often signals creeping costs.
5Pair margin with sales volume to see where the actual profit is made.

Frequently asked questions

Everything you need to know about the Profit Margin Calculator.

What is the difference between margin and markup?

Margin is profit as a percentage of the selling price, while markup is the same profit as a percentage of cost. A ₹200 profit on a ₹500 sale that cost ₹300 is a 40% margin but a 66.7% markup — the two are easy to confuse when pricing.

What is a good profit margin for a business in India?

It varies widely by sector. Retail and FMCG often run on thin single-digit margins, services and software can exceed 30-40%, and manufacturing sits somewhere in between. Judge your margin against competitors in the same industry rather than a universal number.

Can profit margin be negative?

Yes. If your cost exceeds your revenue, the profit is negative and so is the margin, meaning you are selling at a loss. This is common in early-stage businesses or during discount-heavy periods.

Does this calculator include GST?

No. Enter revenue and cost net of GST for a clean margin, since GST is a pass-through tax you collect on behalf of the government rather than income you keep. Mixing GST into either figure distorts the margin.

What costs should I include?

For a net margin, include all costs — raw materials, labour, overheads, rent, marketing and so on. If you include only the direct cost of goods, you get a gross margin instead, which is a different and usually higher figure.

Why is markup always higher than margin?

Because markup divides profit by the smaller number (cost) while margin divides it by the larger number (revenue). The same rupee of profit therefore looks like a bigger percentage when expressed as markup.

How do I convert markup to margin?

Margin = markup / (1 + markup), using decimals. A 50% markup (0.5) becomes 0.5 / 1.5 = 33.3% margin. This tool does the conversion for you automatically once you enter revenue and cost.

How can I improve my profit margin?

You can raise prices, lower costs, shift your sales mix toward higher-margin products, or reduce overheads. Even small improvements compound: shaving 5% off cost on a thin-margin product can meaningfully lift the bottom line.

Is a high margin always better?

Not necessarily. A very high margin with low sales volume may earn less total profit than a modest margin on high volume. Look at margin and turnover together to understand the real money made.

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