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How to calculate Profit margin

The Profit margin formula, with plain worked examples you can check yourself.

Profit margin = (R − C) ÷ R × 100

The result is a percentage (%).

Worked examples

R = 200 · C = 130Profit margin = 35%
R = 300 · C = 270Profit margin = 10%
R = 900 · C = 540Profit margin = 40%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Multiply by 100 to show the answer as a percentage.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Profit & Margins.

Related terms

RevenueGross marginNet incomeEBITDAOperating profit

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