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Profit Margin Calculator

Calculate gross, operating, and net profit margins instantly. See exactly how much profit you keep from each dollar of revenue.

Rent, salaries, marketing, admin (not in COGS)

Gross Profit Margin40.00%
Revenue − COGS$40,000.00
Operating Profit Margin25.00%
After operating expenses$25,000.00
Net Profit Margin20.00%
After taxes — the bottom line$20,000.00
Markup Percentage66.67%

Markup = (Revenue − COGS) ÷ COGS × 100

Profit Waterfall

Revenue$100,000.00
− Cost of Goods Sold($60,000.00)
= Gross Profit$40,000.00
− Operating Expenses($15,000.00)
= Operating Profit$25,000.00
− Taxes($5,000.00)
= Net Profit$20,000.00
→ Markup calculator→ Break-even calculator

Understanding Profit Margins

Profit margin is one of the most important metrics for any business. It tells you how efficiently your business converts revenue into profit.

Three Types of Profit Margin

  • Gross Margin: Revenue minus cost of goods sold. Shows production efficiency.
  • Operating Margin: After all operating expenses (rent, salaries, marketing). Shows operational efficiency.
  • Net Margin: After taxes and all other expenses. The true bottom line.

Industry Benchmarks

  • Retail: 2–5% net
  • Restaurants: 3–9% net
  • Manufacturing: 5–10% net
  • Professional Services: 15–25% net
  • Software/SaaS: 15–40% net

Margin vs Markup

Don't confuse margin with markup. Margin is profit ÷ revenue. Markup is profit ÷ cost. Always be clear which one you're using when pricing products.

Frequently Asked Questions

What is a good profit margin?

Net margins above 10% are generally healthy. Software: 15–40%. Professional services: 15–25%. Retail: 2–5%.

Gross margin vs net margin?

Gross margin = (Revenue − COGS) / Revenue. Net margin subtracts all expenses including operating costs and taxes.

How is margin different from markup?

Margin = Profit / Revenue. Markup = Profit / Cost. A 100% markup equals a 50% margin.