Gross margin
Use the costs of delivering the service or product, such as direct labor, materials and other cost-of-sales items. General operating expenses are excluded.
FREE BUSINESS TOOL · USD
Free Profit Margin Calculator
Calculate profit, margin and markup—or find the selling price you need to reach a target margin.
Updated September 11, 2026 · No signup requiredCheck your profit margin
Use a total cost for a quick calculation, or build up the cost of a service job.
How to calculate profit margin
Subtract costs from revenue to find profit. Divide that profit by revenue and multiply by 100 to express it as a percentage.
Profit margin = (revenue − cost) ÷ revenue × 100
Use figures from the same job or reporting period. The calculator also shows your profit in dollars and the markup relative to cost, so you can compare all three without mixing them up.
Example: an $800 job sold for $1,000
If your job costs $800 and you charge $1,000, you earn $200 in profit. That is a 20% profit margin because $200 is 20% of revenue. It is also a 25% markup because $200 is 25% of the cost.
To earn a 25% margin on the same $800 cost, charge at least $1,066.67. The target-price mode rounds upward to the next cent rather than leaving you just below your target.
Profit margin vs. markup
Margin divides profit by revenue. Markup divides profit by cost. A 30% markup does not produce a 30% margin: adding $30 to a $100 cost gives a $130 price and a 23.08% margin.
| Target margin | Minimum price | Profit | Approx. markup |
|---|---|---|---|
| 10% | $888.89 | $88.89 | 11.11% |
| 20% | $1,000.00 | $200.00 | 25.00% |
| 30% | $1,142.86 | $342.86 | 42.86% |
| 40% | $1,333.34 | $533.34 | 66.67% |
Which costs should you include?
Job margin after overhead
The service-job option adds labor, direct costs and an allocated share of monthly overhead. The result reflects those inputs, rather than claiming to be a final company-wide net margin.
Net margin
Use revenue and all applicable expenses for the same reporting period, including operating expenses, interest and income taxes. The calculator does not determine or calculate those expenses for you.
Build a service-job profit estimate
- Count labor consistently. People × elapsed job hours gives person-hours. Multiply by the loaded cost per person-hour.
- Add direct costs. Include materials, subcontractors and job-specific expenses that are not already in labor or overhead.
- Allocate overhead. Divide the team’s monthly overhead by its monthly billable person-hours, then multiply by this job’s person-hours.
- Compare with your price. Check the resulting profit and margin, or switch to target pricing before creating a quote.
For example, two people on a five-hour job at $30 per person-hour cost $300 in labor. Add $250 in direct costs and $100 in allocated overhead: total cost is $650. A $1,000 price leaves $350 and a 35% margin on those costs.
Profit margin calculator questions
What is a good profit margin for a service business?
There is no single target for every service business. Compare the same type of margin across similar jobs and periods, then choose a target that covers your costs and business goals. The sample percentages on this page are examples, not industry benchmarks.
Can profit margin be negative?
Yes. If you charge $1,000 for work that costs $1,200, your loss is $200 and your margin is −20%. The calculator shows the loss instead of replacing it with zero.
What happens if revenue or cost is zero?
Zero revenue makes margin undefined because you cannot divide by zero. Profit or loss still has a dollar value. If cost is zero and revenue is positive, margin is 100%, while markup is undefined. Target-price mode needs a positive cost.
How do I calculate a price for a 30% margin?
Divide your cost by 0.70. For a $700 cost, a $1,000 price leaves $300 profit and a 30% margin. Do not simply add 30% to the cost.
Is this a gross or net profit margin calculator?
The calculation depends on which costs you enter. Direct delivery costs give a gross margin; all applicable expenses for a period give a net margin. The service-job breakdown calculates margin after the labor, materials and overhead you supply.
Does this include sales tax or payment-processing fees?
No rates or fees are automatically added. Keep revenue and cost figures on a consistent basis. Include processing fees or other applicable expenses in your cost figures when you want the result to reflect them.