Written and reviewed by FormulaCraft Team. Each formula on this page is run through our verification engine before publishing.
Last reviewed:
How to calculate profit margin in Excel and Google Sheets
Topic:Finance basicsExcel & Google Sheets
=(B2-A2)/B2✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Cost | Revenue | Profit Margin |
| 80 | 100 | |
| 60 | 90 | |
| 150 | 200 | |
| 300 | 450 |
=(B2-A2)/B2→0.2
Try it with your data
Edit the grid or formula, then run it through a real spreadsheet engine — no signup.
Sample data — click any cell to edit
Runs server-side · free · no signup
Step by step
- 1Set up two columns: Cost (A) and Revenue / Selling Price (B).
- 2In the Profit Margin column, enter =(B2-A2)/B2. This subtracts cost from revenue to get profit, then divides by revenue.
- 3Format the result as Percentage. For example, a cost of $80 and revenue of $100 yields a 20% profit margin.
Tips
- For net profit margin, replace the cost with total expenses including taxes and operating costs to get the true bottom-line margin.
Working on a sheet you inherited? Run the Auditor on the whole file first — it flags every #REF!, #N/A, broken column pattern, and inconsistent formula in seconds, free, no signup.
Frequently asked
What is a good profit margin?
It varies by industry. Retail averages 2–10%, software 20–40%, and professional services 15–25%. Compare to industry benchmarks.
How is profit margin different from markup?
Margin is profit divided by revenue; markup is profit divided by cost. A 25% markup corresponds to a 20% margin.
More on Finance basics
See all →How-to
How to calculate tiered commission
Apply different commission rates by sales tier using IFS. Works in Excel 2019/365 and Google Sheets.
How-toHow to calculate gross margin
Compute gross margin percentage as (price − cost) / price. Identical in Excel and Google Sheets.
How-toHow to calculate compound interest
Compute a compounded future value with principal × (1 + rate)^years using POWER. Identical in Excel and Google Sheets.
How-toHow to calculate cost per unit
Divide total cost by total units to find cost per unit using a simple formula in Excel or Google Sheets.
How-toHow to calculate a selling price from a target margin
Use cost and target gross margin percentage to back-calculate the required selling price in Excel or Google Sheets.
How-toHow to calculate simple interest
Multiply principal, rate, and time to compute simple interest using a straightforward formula in Excel or Sheets.