Formula
How to calculate profit margin
Profit margin shows how much profit remains after costs and expenses are subtracted from revenue. Use gross margin for direct costs, operating margin for business expenses, and net margin for final profitability.
Gross margin = Gross profit ÷ Revenue × 100
Net margin = Net profit ÷ Revenue × 100
Break-even
How to calculate break-even units
The break-even point tells you how many units you need to sell before the business starts making profit. It compares fixed costs with the contribution margin per unit.
Break-even units = Fixed costs ÷ (Selling price − Variable cost)
Contribution margin = Selling price − Variable cost