Use this product profit margin calculator to quickly and efficiently determine the profitability of your products, helping you to set competitive pricing while ensuring a satisfactory profit margin. By inputting the cost of the product and your desired markup percentage, you can instantly calculate the sale price, profit amount, and gross margin percentage.

Profit Margin Formula:

Profit Margin 🟰 (Sale Price ➖ Cost Price ➗ Sale Price) ✖️ 100

What is Product Profit Margin, Anyway?

Product profit margin is an important metric for businesses to track because it can help them understand how profitable each of their products is. This metric tells you what percentage of the sale price is profit. It can also be used to compare the profitability of different products and to make pricing decisions.

Example:

Company A:

• Sale Price of Product: $150
• Cost Price of Product: $100
  • Profit Margin: 33.33%
  • Company A has a profit margin of 33.33%, meaning for every $1 of revenue, 33.33 cents is profit.

Company B:

• Sale Price of Product: $200
• Cost Price of Product: $120
  • Profit Margin: 40%
  • Company B has a profit margin of 40%, meaning for every $1 of revenue, 40 cents is profit.

Company B is more profitable per product sold than Company A, even though Company A might be selling its product at a cheaper price. The profit margin gives a percentage that makes it easier to compare the profitability of different products or companies regardless of their size or sales volume.

TL;DR: Product profit margin is the percentage of profit that a business makes on each product it sells. It is calculated by subtracting the cost of goods sold (COGS) from the selling price of the product, and then dividing that number by the selling price and multiplying by 100. Product profit margin is the difference between the selling price of a product and the cost of producing it, expressed as a percentage of the selling price.