How to Calculate Margin Percentage (The Simple Way!)

💼 Understanding margin percentage is essential whether you’re selling products, offering services, or just trying to make sense of your business finances. It’s a simple formula that tells you how much profit you’re making compared to your revenue.

In this article, we’ll walk you through what margin percentage is, how to calculate it, and provide a free calculator to make it super clear.

🙋‍♀️ What Is Margin Percentage?

Margin percentage tells you how much profit you’re making from each dollar of revenue. It’s also called “gross margin” or “profit margin.”

For example, if you sell something for $100 and it costs you $60 to make or buy it, then your margin is 40%.

Margin helps you answer important questions like:

  • Am I pricing my products correctly?
  • How much profit am I really making?
  • Can I afford to offer discounts?

📐 Margin Percentage Formula

Here’s the simple formula to calculate margin percentage:


Margin (%) = (Revenue − Cost) ÷ Revenue × 100

Where:

  • Revenue = The selling price of the product or service
  • Cost = The cost to produce or acquire the item

💡 Quick Example:
If you sell a laptop for $1,000 and it cost you $700:

Margin = (1,000 − 700) ÷ 1,000 × 100 = 30%

That means you’re making a 30% margin.

🧮 Margin Percentage Calculator







📊 Margin vs Markup — What’s the Difference?

Many people confuse margin with markup, but they’re not the same:

  • Margin is based on selling price
  • Markup is based on cost

Let’s say:

  • Cost = $60
  • Selling Price = $100

Then:

  • Margin = 40%
  • Markup = 66.67%

So, margin tells you how much profit you're keeping from your revenue, while markup tells you how much you added to the cost.

🎯 Tips to Improve Your Margin

  • Reduce your production or sourcing costs
  • Raise your prices strategically
  • Offer value-added services or bundles
  • Monitor expenses and negotiate with suppliers
  • Focus on high-margin products

📎 Summary

Knowing your margin percentage is important for pricing, profit planning, and business success. Use the calculator above to run quick scenarios, and revisit your margins often to keep your business growing.

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