Your profit margin is an important figure for your business because it tells you the percentage of each sale that is profit. Profit margins are important when you are pricing products, generating sales reports and pursuing financing. Microsoft Excel will calculate profit margins if you create the spreadsheet and input the formula properly. Knowing how to calculate your profit margin will help you take control of your business and ensure that each sale nets the profit you expect.
Create a new spreadsheet in Microsoft Excel. Enter headers over the first four columns titled "Revenue," "Cost," "Profit" and "Profit Margin."
Enter the sale price in the next row under the "Revenue column. For example, if the item in question sells for $25, enter 25 in the first column.
Input the cost of the product in the second column. If you purchase the item for $8 each, enter 8 in that column.
Create a formula in the third column to determine your profit on the sale. The formula should read "=A2-B2" to subtract the cost of the product from the sale price. The difference is your overall profit, in this example the formula result would be $17.
Input a formula in the final column to calculate the profit margin on the sale. The formula should divide the profit by the amount of the sale, or =(C2/A2)100 to produce a percentage. In the example, the formula would calculate (17/25)100 to produce 68 percent profit margin result.