Question 1

What is profit margin?

Accepted Answer

Profit margin is the percentage of revenue that remains as profit after subtracting costs. Gross margin uses only direct costs (cost of goods), while net margin also includes operating expenses, taxes, and other overhead.

Question 2

What is the difference between margin and markup?

Accepted Answer

Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. For example, buying at $60 and selling at $100 gives 40% margin but 66.7% markup. Both describe the same profit, just from different perspectives.

Question 3

What is a good profit margin?

Accepted Answer

It varies by industry. Software/SaaS: 70-90% gross margin. Retail: 25-50%. Manufacturing: 25-35%. Restaurants: 3-9% net margin. Compare against your industry benchmarks rather than absolute numbers.

Question 4

How do I calculate break-even?

Accepted Answer

Break-even is the point where revenue equals total costs (zero profit). This calculator shows your break-even revenue based on your cost structure and target margin. Below break-even you lose money; above it you profit.

Profit Margin Calculator

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