Formula
Profit margin divides what remains after every cost by revenue:
Profit margin = (revenue − total costs) / revenue
This is the overall margin for the period you enter. It is not the margin on one unit and it does not separate product cost from overhead.
Assumptions
- Revenue and costs cover the same period.
- Total costs already include the expenses you want removed.
Worked example
Revenue of $50,000.00 and costs of $32,000.00 leave a profit margin of 36.00%.
Input definitions
- Revenue
- Money received from sales in the period.
- Total costs
- Every cost you want subtracted. Zero is allowed.
Limitations
This is a planning estimate, not accounting, tax, payroll, or advertising advice. The currency control changes the symbol only.
Questions
How is this different from the profit calculator?
The profit calculator prices one sale after a fee and shipping. This page measures a whole period.
Can the margin be negative?
Yes. Costs above revenue produce a negative margin.