# Profit MarginCalculator

Determine the best selling prices for your menu items to increase your profits.

### Find a profitable selling price for your menu items

Menu pricing is the engine behind your company’s success. Pricing directly impacts your ability to fund essential aspects of your business, including equipment, utilities, labor, ingredients, and more. Knowing your restaurant’s food costs can help you make effective business decisions, like how much to charge for items on your menu for maximum profitability or when it’s time to look for new suppliers. With this knowledge, you’ll be able to optimize profits that impact your bottom line.

## Frequently Asked Questions

What is profit margin?

Profit margin indicates the profitability of a product, service, or business. It’s expressed as a percentage; the higher the number, the more profitable the business.

How do you calculate gross profit margin?

It’s simple to find gross profit margin automatically using the calculator. To calculate manually, subtract the cost of goods sold (COGS) from the net sales (gross revenues minus returns, allowances, and discounts). Then divide this figure by net sales, to calculate the gross profit margin in a percentage.

MenuDrive’s free profit margin calculator does it for you, but you can also use the following formula:

Step 1: X (Net sales) – Y (COGS) = Z

Step 2: Z / X (Net sales) = % Gross profit margin

How do you calculate a 20% profit margin?

Follow these easy steps to calculate a 20% profit margin:

1. Use 20% in its decimal form, which is 0.2

2. Subtract 0.2 from 1 to get 0.8

3. Divide the original price of your good by 0.8

4. The resulting number is how much you should charge for a 20% profit margin

How does the profit margin calculator work?

MenuDrive’s free profit margin calculator is fast and easy to use. It simply takes the markup percentage you enter, adds that in decimal format to the cost, and then gives you a sale price which reflects the markup.

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