What is your profit margin really telling you?
Type your revenue and your costs. We show your margin, what each point of it is worth in dollars, and the one cost to look at first.
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Reading your number
Profit margin = (Revenue - Total costs) / Revenue x 100
Your profit margin is the share of every dollar that stays with you after the work is paid for. A 20 percent margin means a dollar comes in and twenty cents stay. It is the pulse of the business: one number that tells you whether all that activity is turning into money. The trap most owners fall into is watching revenue instead. Revenue can grow while margin quietly shrinks, and the business gets bigger and poorer at the same time. The smart next question is not "how do I raise it," it is "which cost moved." Look at the biggest cost line first, because a small percent change there is worth more dollars than a big change in a small line.
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The other six questions
How the math works
Your profit margin is what is left after costs, divided by revenue. If you bring in $100 and spend $80, you keep $20, and your margin is 20 percent. Each point of margin is worth one percent of your revenue in profit, so at $20 million of revenue, one point of margin is $200,000 a year.
Common questions
How do I calculate my profit margin?
Take your revenue, subtract all your costs, then divide the result by your revenue. Multiply by 100 to get a percent. A business with $2,000,000 in revenue and $1,700,000 in costs keeps $300,000, which is a 15 percent margin.
What is a good profit margin?
It depends on your industry. A grocery store can be healthy on a thin margin while a software company expects a fat one. Compare yourself against businesses like yours, not against a universal number. The calculator lets you set your own healthy line for exactly this reason.
What is the difference between margin and markup?
Margin is profit as a share of your selling price. Markup is profit as a share of your cost. A product bought for $50 and sold for $100 has a 50 percent margin but a 100 percent markup. Same dollars, two different yardsticks.
Built by Finalysis, the financial intelligence platform for owner operators.
This is a planning shape, not a forecast. It uses the numbers you type, nothing more. Margin health varies by industry, so the thresholds here are general operator rules of thumb, and you can move them under Check the math. Nothing you enter leaves your device.