Profit Margin Formula
The profit margin formula is used to find the profit margin in a sale. Profit margin is defined as the revenue generated excluding the expenses divided by the revenue generated. It is the ratio of net sale subtracted by the cost of goods sold, cost of raw material, wages of workers, etc, and net sale. Profit margin is the ratio of the difference of revenue and cost with the revenue multiplied by 10. Let us see the profit margin formula along with the solved examples.
What is Profit Margin Formula?
The profit margin formula is further divided into two formulas of gross profit margin formula and net profit margin formula which are explained below the profit margin formula. The profit margin formula can be given as:
Profit Margin Formula = ((Revenue—Cost)/Revenue) × 100)
Two main profit margins are net profit margin and gross profit margin. The formula for both the profit margins are listed below:
Gross Profit Margin = ((Gross Profit/Revenue) × 100)
Net Profit Margin = ((Net Profit/Revenue) × 100)
Let's take a quick look at a couple of examples to understand the profit margin formula better.
Solved Examples Using Poisson Distribution Formula

Example 1: Given below the income statement of a company:
Revenue = Rs 7,20,000
Gross Profit = Rs 3,00,000
Net Income = Rs 50,000
Find the Net Profit Margin and Gross Profit Margin of the company using the profit margin formula.
Solution:
Revenue = 7,20,000
Gross Profit = 3,00,000
Net Income = 50,000
To Find: Net Profit Margin and Gross Profit Margin
Using Profit Margin Formula:
Gross Profit Margin =\(\dfrac{\text{Gross Profit}}{\text{Revenue}} \times100 = \dfrac{300000}{720000} \times 100 \) = 41.67%
Net Profit Margin =\(\dfrac{\text{Net Profit}}{\text{Revenue}} \times100
= \dfrac{50000}{720000} \times100 \) = 6.94%
Answer: Net Profit Margin of the company is 6.94% and its Gross Profit Margin is 41.67%. 
Example 2: Sam bought 1500 articles for 17000 rupees. He sold those articles for 21000 rupees. Find the gross profit margin for the articles using the profit margin formula.
Solution:
Given: Revenue = 21000
Cost of goods sold = 17000
To Find: Gross Profit Margin
Using Profit Margin Formula:
\(\dfrac{\text{Gross Profit}}{\text{Revenue}} \times100 = \dfrac{2100017000}{21000} \times 100= \dfrac{4000}{21000} \times 100 \)=19.05%
Answer: Gross Profit Margin for the articles is 19.05%.