How to Calculate Profit Percentage (Margin) — One Formula
How to calculate profit as a percentage: profit margin = profit ÷ revenue × 100%. Gross vs net vs markup explained with examples, plus the reverse formula for setting targets.
“What percent am I making?” comes down to one formula — as long as you pick the right profit.
The core formula
Profit percentage (margin) = Profit ÷ Revenue × 100%
Example: monthly revenue $50,000, costs $35,000. Profit = $15,000; margin = 15,000 ÷ 50,000 = 30%.
Three kinds of “profit percentage”
| Metric | Formula | Answers |
|---|---|---|
| Gross margin | (Revenue − COGS) ÷ Revenue | Does the product itself make money? |
| Net margin | Net profit ÷ Revenue | What’s left after rent, payroll, ads? |
| Markup | Profit ÷ Cost | How much was added on top of cost? |
Same business, very different numbers: revenue $100, product cost $60, rent + payroll $25. Gross margin = 40%; net margin = (100 − 60 − 25) ÷ 100 = 15%; markup = 40 ÷ 60 ≈ 66.7%.
When someone asks “what’s your profit percentage”, say which one you mean.
Running it backwards for targets
“I want to make 20% — what should revenue be?” Revenue = Cost ÷ (1 − target margin). Cost $80, target 20%: revenue = 80 ÷ 0.8 = $100.
Tools
- Quick check: profit calculator — revenue + cost → profit and margin
- Any combination: margin calculator — solve for the third value from any two
- With ad spend: ROI calculator — also gives ROAS and ACoS
One-line takeaway
Profit over revenue is margin; profit over cost is markup. Same numerator, different denominator, very different numbers.