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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
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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.
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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.
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