The term operating margin refers to the minimum profit margin after deducting the production cost, variable costs, salaries, taxes, etc. If you get a positive figure after deducting those, that means you are having profit; it’s better if the operating margin calculation is higher.
You have to know all the variables or values & a calculator on your hand, you can have the value right; the calculator is specially designed for the assumption.
What Are the Uses of Operating Margin Calculator?
Let’s see the purposes you can use an operating margin calculator for:
- First of all, you can have a net profit per product at a certain time & can take the necessary steps for your business’s betterment & avoid loss.
- Secondly, you must use it if you want to know how much currency you are spending monthly or annually for your business.
Formula: How To Calculate Gross Profit Margin And Markup?
If you want to calculate gross profit margin and markup percentage by manually then you should need two formulas. Follow the below 2 formulas to know that how to do it manually.
Gross Profit Margin and Markup Formula with Example:
Profit Margin Formula:
Gross Profit Margin = (( Revenue - Cost Unit sales ) ÷ Revenue ) x 100%
Example:
Suppose a startup/company’s revenue 40, Cost of Unit sale 30. Now see how to calcuate gross profit margin.
=((40-30) ÷ 40) x 100%
=(10 ÷ 40) x 100%
= .25 x 100%
= 25%
Profit Markup Formula:
Gross profit Markup= (Revenue - Cost Unit sales ) ÷ Cost Unit sales x 100%
Example:
Suppose revenue 40 and cost of unit sales 30. Now see how to calculate the gross profit markup.
=(40-30) ÷ 30 x 100%
=10 ÷ 30 x 100%
=0.33 x 100%
=33.33%
Formula: Gross Profit Margin Calculator Excel:
If you want to know that how To Calculate Gross Profit Margin in Excel then make a excel sheet like the below table.
| A | B | |
| 1 | Revenue: | |
| 2 | Cost of Unit sale: | |
| 3 | Margin: | =((B1-B2)/B1)*100% |
| 4 | Markup: | =(B1-B2)/B2*100% |
Input this formula on Gross profit margin cell (B3) =((B1-B2)/B1)*100%
Input this formula on Gross profit markup cell (B4) =(B1-B2)/B2*100%
You can also follow the screenshot.
