Profit & Loss Calculator
About Profit & Loss Calculator
What Is Profit and Loss?
Profit and loss (P&L) is the most basic measure of business health. Revenue minus cost equals profit. When costs exceed revenue, you have a loss. But there’s more nuance – profit margin tells you the percentage of revenue that becomes profit, while markup tells you how much you added to your cost to arrive at the selling price. A product bought for $60 and sold for $100 has a $40 profit, a 40% margin, and a 66.7% markup. These three numbers serve different purposes in pricing strategy.
Margin vs Markup
Margin is profit divided by revenue: (Revenue - Cost) / Revenue x 100. Markup is profit divided by cost: (Revenue - Cost) / Cost x 100. They always produce different numbers for the same transaction. A 50% markup yields a 33.3% margin. Many business owners confuse the two, which leads to pricing errors. This calculator shows both so you always know exactly where you stand.
How to Use This Calculator
Enter your total revenue (selling price or sales total) and total cost (cost of goods, operating expenses, or purchase price). Click Calculate to see profit or loss in dollars, profit margin as a percentage, and markup as a percentage. You can also enter multiple line items for a detailed breakdown.
Frequently Asked Questions
What is a good profit margin?
It varies by industry. Software companies often achieve 60-80% margins. Retail typically runs 2-5%. Restaurants average 3-9%. Compare your margin to industry benchmarks for a meaningful assessment.
What is the difference between margin and markup?
Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. A 50% markup results in approximately a 33% margin. They are related but not interchangeable.
How do I improve my profit margin?
Either increase revenue without proportionally increasing costs (raise prices, upsell) or reduce costs without reducing revenue (negotiate with suppliers, improve efficiency, reduce waste).
Related Tools
