Profit margin formula
Profit margin is profit divided by revenue, multiplied by 100. If revenue is $10,000 and profit is $3,000, the margin is 30%.
Costs change the picture
A sale can look strong before fees but weaker after platform fees, payment charges, shipping or delivery cost. Include costs that are directly connected to the sale.
Margin vs markup
Margin and markup answer different questions. Margin asks what percentage of selling price is profit. Markup asks how much profit was added on top of cost.
Use margin for comparison
Margin is useful for comparing products, services or campaigns because it ties profit back to revenue. It is still a simplified metric unless all costs are captured.
Common questions
Frequently asked questions
Is profit margin the same as markup?+
No. Margin divides profit by revenue. Markup divides profit by cost.
Should I include payment fees?+
Yes, if those fees are part of the cost of making the sale.
Official source and scope
Investopedia profit margin overviewRule period: Current published rules within the guide’s stated period and scope
Next scheduled review: 15 December 2026
The guide’s rule statements, scope and linked calculator were reviewed against the primary source shown on the page.
This guide explains general rules and does not replace personalised tax, financial, employment or legal advice. For exact filing, payroll, lending or compliance decisions, use the official source and professional guidance where needed.