Profit margin calculator
A product can have a healthy-looking markup and a very different margin. Enter revenue and direct cost to see both percentages before changing price, channel, or product mix.
Inputs and formulas
- Revenue or sale price: the amount collected for the product or period.
- COGS: direct production, purchase, packaging, and fulfillment costs attributable to that sale.
- Gross profit = revenue − COGS.
- Gross margin = gross profit ÷ revenue; markup = gross profit ÷ COGS. Both are shown as percentages.
Worked example
For a $100 sale with $40 of COGS, gross profit is $60, gross margin is 60%, and markup is 150%. The margin says $0.60 of each revenue dollar remains before operating expenses; the markup says price is 1.5 times the cost above the original $40 cost.
Caveats and next decision
This is a gross calculation, not net profit. Add shipping subsidies, payment fees, returns, discounts, sales commissions, and overhead when judging channel or company profitability. If COGS is zero, markup is not meaningful; if revenue is zero, margin is not defined.
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