Revenue and costs Updated November 2026

EBITDA margin

EBITDA margin = EBITDA / revenue, expressed as a percentage. It shows how much of each unit of sales becomes operating profit before depreciation, interest and tax, and is the standard profitability measure for comparing companies and for forecasting EBITDA as a percent of revenue.

Syntax

EBITDA margin = EBITDA / Revenue

Examples

EBITDA 200, revenue 1,000
=200 / 1000

Result: 20.0%

EBITDA 45, revenue 300
=45 / 300

Result: 15.0%

Forecast: next year revenue 1,100 at a 20% margin
=1100 * 20%

Result: EBITDA 220

Common mistakes

Dividing by gross profit or by total costs instead of revenue.
Comparing margins across industries: software margins of 30% and grocery margins of 5% are both normal for their sector.
Forecasting a flat margin while fixed costs are large: with operating leverage, margin should expand as revenue grows.

Practice EBITDA margin

These drills check your answer on live data, free, no account needed.

EBITDA and EBITDA marginRevenue, cost of goods sold and operating expenses are set up. Fill EBITDA in row 9 (revenue less both cost lines) and EBITDA margin in row 10.
Fixed and variable operating costsOperating expenses have a fixed part that rises with inflation and a variable part tied to revenue. Fill row 9: fixed costs grown by inflation for the number of years in row 7, plus the variable share of revenue.

Questions

What is a good EBITDA margin?

It depends on the industry: 10% to 20% is common for manufacturing and services, 30% or more for software and some consumer brands, under 10% for retail and distribution.

What is the difference between EBITDA margin and operating margin?

Operating (EBIT) margin is after depreciation and amortization; EBITDA margin is before them, so it is always equal or higher.

EBITDAEBITDA = EBIT + depreciation and amortization, or net income + interest + taxes + D&A. Exact worked examples, what EBITDA leaves out and the usual mistakes.
Gross marginGross margin = (revenue - COGS) / revenue. The formula, worked examples with exact percentages, the difference between margin and markup and common mistakes.
Operating leverageDegree of operating leverage = contribution margin / EBIT = % change in EBIT / % change in sales. An example where a 10% sales rise lifts EBIT 40%, and why.
COGS as a percent of revenueCOGS % = cost of goods sold / revenue, and forecast COGS = revenue x COGS %. How to compute the historical ratio, project it and link it to gross margin.