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What is Profit margin?

Profit margin is the share of revenue kept as profit, as a percentage: (revenue − costs) ÷ revenue. A $10,000 job costing $6,500 has a 35% margin. It's the single number that tells you whether the business is actually working — distinct from markup, which is measured against cost.

In practice

A cafe's monthly revenue is $40,000; ingredients, wages, and rent total $34,000. Net margin = $6,000 / $40,000 = 15%.

Related terms

  • Markup — The percentage added to cost to arrive at the selling price.
  • Gross profit — Revenue minus the direct costs of delivering it.
  • Net profit — Revenue minus all expenses — the bottom line.

Know your real margin

Billia's free profit margin calculator shows margin and markup side by side.

Open the profit margin calculator

Frequently asked questions

What's a good profit margin?

It depends entirely on the industry — grocery stores run 2–3%, software 70%+. Compare against your own industry, not a universal number.

Gross margin vs. net margin?

Gross margin subtracts only direct costs; net margin subtracts everything including overhead and taxes. Net is the number that matters to owners.

My revenue grew but margin shrank — what happened?

Costs grew faster than prices. The usual culprits: discounting to win work, unbilled hours, or material costs you didn't pass through. Track margin per job, not just per month.