Excel allows a user to calculate profit margin percentage from a sale price and cost, using the simple formula. The profit margin is calculated as a rate between price and cost difference and price. This step by step tutorial will assist all levels of Excel users in getting a profit margin percentage.
Figure 1. The result of the formula
Syntax of the Formula
The generic formula is:
=(price - cost)/price
The parameters of the formula are:
- price – a sale price.
- cost – the cost of the product.
Setting up Our Data for the Example
Let’s look at the structure of the data we will use. In column B, we have the price and in column C, we have the cost. In column D, we want to calculate a profit margin percentage.
Figure 2. Data that we will use in the example
Calculating the Profit Margin Percentage
In our example, the sale price is $25 (B3) and the cost is $22 (C3) Based on these two values, we want to calculate the profit margin percentage in the cell D3.
The formula looks like:
=(B3 - C3)/B3
The parameter price is the cell B3, while the cost is in C3.
To apply the formula, we need to follow these steps:
- Select cell D3 and click on it
- Insert the formula:
=(B3 - C3)/B3
- Press enter
- Drag the formula down to the other cells in the column by clicking and dragging the little “+” icon at the bottom-right of the cell.
Figure 3. Calculating the profit margin percentage
The result in the cell D3 is 12%, which is the profit margin for the price of $25 and the cost $22.
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