Free Profit Margin Calculator
Not sure how much you’re actually making after covering your costs? Use Invoice Fly’s free profit margin calculator to calculate your profit margin and see how much of each sale you keep as profit. Use the results to check your pricing and keep your business profitable.
Profit Margin Calculator
Number of workers needed for the job
Total hours required to complete the job
Average hourly rate per worker
Total monthly business expenses (rent, utilities, insurance)
Total working hours per month
Total hours needed to complete this specific job
Total cost of all supplies used for the job
The final price you will charge your client
Total Summary
How to use Invoice Fly's profit margin calculator
Table of Contents
How to calculate profit margin
Your profit margin shows how much of your revenue you keep as profit after covering your costs. Here’s how to calculate it using a simple example:
- Find your cost: Say it costs $30 to make or buy a product.
- Find your selling price: You sell the product for $50.
- Calculate your profit: Subtract your cost from your selling price: $50 − $30 = $20.
- Divide profit by revenue: $20 ÷ $50 = 0.4.
- Convert to a percentage: Multiply by 100 to get a 40% profit margin.
That’s it! The profit margin formula is (Profit ÷ Revenue) × 100. That’s how you calculate profit margin, but you don’t have to do the math yourself. Invoice Fly’s profit margin calculator is your best friend for calculating your margin in seconds!
How to calculate gross profit margin
Now that you understand the profit margin formula, let’s look at gross profit margin. It helps you see how much money you keep from sales after deducting the direct costs of providing a product or service.
Gross margin formula:
Gross profit margin (%) = (Gross profit ÷ Revenue) × 100
To calculate it, first subtract your direct costs, such as materials and labor, from your revenue:
Gross profit = Revenue − Direct costs
Then divide your gross profit by your revenue and multiply by 100 to get your gross margin percentage.
For example, if you earn €200 from a job and spend €80 on direct costs, your gross profit is €120 and your gross profit margin is 60%.
Use Invoice Fly’s free profit margin calculator to check your numbers and see how your pricing affects your profits.
Why use a profit margin calculator?
Pricing your products or services can be tricky when you’re juggling labor, materials, and other business expenses. A profit margin calculator helps you see how much you actually earn from each sale, so you can set prices with confidence and keep your business profitable.
- Set profitable prices: Calculate how much to charge to cover your costs and reach your desired profit margin.
- Understand your costs: Factor in labor, materials, and overhead to see what each job really costs your business.
- Calculate profit margin quickly: Find your profit, markup, and profit margin without working through the formulas manually.
- Make smarter pricing decisions: Compare costs and selling prices to spot opportunities to improve your profit margins.
Frequently asked questions about profit margin
Gross profit margin shows how much revenue is left after deducting the direct costs of providing a product or service, such as materials and labor. Net profit margin goes further by accounting for all business expenses, including rent, salaries, taxes, and other overheads. Gross margin helps you understand how profitable your products or services are, while net margin shows how much of your revenue remains as profit after all expenses.
A high profit margin is usually a good sign, but it’s not the only measure of a healthy business. Your prices still need to be competitive, and reinvesting in equipment, marketing, employees, or business growth can help you stay profitable over time. Focus on a sustainable profit margin that covers your costs, supports your goals, and makes sense for your industry.
Sales margin is the percentage of your sales revenue that remains as profit after subtracting the relevant costs. For example, if you sell a service for €200 and your costs are €120, your profit is €80 and your profit margin is 40%. Tracking your sales margin helps you understand whether your prices are covering your costs and leaving enough profit.
To calculate a 20% profit margin, you need to set your selling price so that profit equals 20% of the final price.
Convert 20% to a decimal: 0.20.
Subtract it from 1: 1 − 0.20 = 0.80.
Divide your total cost by 0.80.
For example, if a job costs you €80, divide €80 by 0.80. You’ll need to charge €100 to achieve a 20% profit margin, before accounting for any additional costs not included in that €80.
A good profit margin depends on your industry, business model, and operating costs. Some businesses work with smaller margins and higher sales volumes, while others can earn more on each sale. As a rough guide, a 5% net profit margin is often considered low, 10% moderate, and 20% strong, but these figures aren’t universal. Compare your margin with businesses in your industry and track how it changes over time.
You can calculate profit margin in Excel using a simple formula:
- Enter your costs in cell A1.
- Enter your revenue in cell B1.
- In cell C1, calculate profit with =B1-A1.
- In cell D1, calculate profit margin with =C1/B1.
- Format cell D1 as a percentage.
For example, if your costs are €120 and your revenue is €200, Excel will show a profit margin of 40%. Make sure revenue isn’t zero, as you can’t divide by zero. If you’d rather skip the spreadsheet, use Invoice Fly’s free profit margin calculator to work out your numbers quickly.
To achieve a 10% profit margin, your profit needs to equal 10% of your selling price.
- Convert 10% to a decimal: 0.10.
- Subtract it from 1: 1 − 0.10 = 0.90.
- Divide your total cost by 0.90.
For example, if your costs are €90, divide €90 by 0.90 to get a selling price of €100. This gives you €10 in profit, or a 10% profit margin, assuming all relevant costs are included.
No. Profit is the amount of money left after subtracting costs from revenue, while profit margin expresses that profit as a percentage of revenue. For example, a business that earns €80 in profit from €200 in revenue has a 40% profit margin. Looking at both figures helps you understand how much money you’re making and how efficiently you’re generating it.
To calculate a 30% profit margin, set your selling price so that profit makes up 30% of the final price.
- Convert 30% to a decimal: 0.30.
- Subtract it from 1: 1 − 0.30 = 0.70.
- Divide your total cost by 0.70.
For example, if a job costs €140, divide €140 by 0.70. Your selling price should be €200 to achieve a 30% profit margin, assuming all relevant costs are included.
Markup measures how much you add to your costs, while profit margin measures how much of your selling price is profit. To convert profit margin into markup:
Divide your profit margin percentage by 100.
Subtract the result from 1.
Divide your margin decimal by that result.
For example, a 40% profit margin converts to a markup of approximately 66.7%. If your costs are €60, a 40% margin means a selling price of €100, giving you €40 in profit. That €40 profit is 66.7% of the original €60 cost.
Use Invoice Fly’s free profit margin calculator to check your costs, selling price, and profit margin without doing the maths by hand.
