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Profit Margin Calculator: Quickly See Revenue, COGS, Gross Profit, and Margin %
Use this Profit Margin Calculator to estimate how much profit you keep from each sale. Enter your unit price, units sold, and unit cost to instantly see Revenue, Cost of Goods Sold (COGS), Gross Profit, and Gross Margin %. Great for pricing products, testing scenarios, and improving profitability.
1) What the Calculator Does
This tool evaluates product or service profitability at a glance. By combining your selling price, quantity, and unit cost, it returns the core metrics most teams use to guide pricing, discounts, and targeting margins. It assumes a simple model focused on gross profit (before operating expenses). If you later factor in operating costs, you can extend the logic to net profit.
2) Inputs
| Input | Description |
|---|---|
| Unit Price | The selling price for each unit of the product or service. |
| Units Sold | Total number of units sold in the period you’re analyzing. |
| Unit Cost | Your per-unit production or acquisition cost (materials, manufacturing, or wholesale cost). This is used to compute COGS. |
3) How It Works (Formula & Logic)
The calculator uses standard gross margin math:
Revenue = Unit Price × Units SoldCOGS = Unit Cost × Units SoldGross Profit = Revenue − COGSGross Margin % = (Gross Profit ÷ Revenue) × 100
Example: If you sell 50 units at $200 and your unit cost is $100, then Revenue = 200 × 50 = 10,000, COGS = 100 × 50 = 5,000, Gross Profit = 5,000, and Margin % = 50%.
4) Outputs
| Output | What It Means |
|---|---|
| Revenue | Total sales dollars generated (Unit Price × Units Sold). |
| COGS | Total direct cost tied to those units (Unit Cost × Units Sold). |
| Gross Profit | Money left after covering COGS (Revenue − COGS). Used to pay operating expenses, marketing, payroll, etc. |
| Gross Margin % | Profitability rate per dollar of sales (Gross Profit ÷ Revenue). |
5) Practical Use Cases
- Price testing: Try new price points to hit a target margin.
- Discount planning: See how promotions impact margin before you launch.
- Cost negotiations: Model savings from lower unit costs or bulk buys.
- Sales forecasting: Estimate profit impact at different sales volumes.
- E-commerce bundles: Combine items and check blended margins.
6) FAQ
What’s the difference between gross margin and net margin?
Gross margin looks only at sales minus COGS. Net margin also subtracts operating expenses (marketing, salaries, rent), interest, and taxes. This calculator shows gross margin.
Is a 50% gross margin always “good”?
It depends on your industry and business model. Software often runs higher margins; retail and hardware are typically lower. Compare against your own history and sector benchmarks.
How do discounts affect margin?
Discounts lower Unit Price, which reduces Revenue, Gross Profit, and Margin %. Model your promo price in the calculator to ensure margin stays healthy.
Should shipping be in COGS?
Include direct shipping or fulfillment costs tied to each unit in COGS. General logistics overhead belongs in operating expenses (outside this calculator).
Can I use this for services?
Yes. Treat “unit” as an hour or package, your price as the rate, and unit cost as direct labor or delivery cost.
How can I improve my profit margin?
- Raise prices where value supports it.
- Lower unit costs via vendor negotiation or process improvements.
- Shift mix toward higher-margin products.
- Reduce discounts and leakage (returns, defects, shrink).
