Profit Margin Calculator
Calculate gross margin, net margin, and markup from revenue and cost of goods.
Compare margin vs markup instantly and see break-even selling price.
Profit margin measures how much of each dollar of revenue a business actually keeps as profit. There are two key versions — gross margin and net margin — and each tells a different story about business health.
Gross Profit Margin: Gross Profit = Revenue − Cost of Goods Sold (COGS) Gross Margin % = (Gross Profit / Revenue) × 100
COGS includes the direct costs of making or acquiring the product: raw materials, manufacturing labor, and direct overhead. It does NOT include marketing, rent, salaries of office staff, or taxes.
Net Profit Margin: Net Profit = Revenue − All Expenses (COGS + Operating + Tax + Interest) Net Margin % = (Net Profit / Revenue) × 100
Net margin is the “bottom line” — what’s left after every expense is paid.
Worked example: A small business has:
- Revenue: $120,000
- COGS: $72,000
- Operating expenses: $28,000
- Tax: $4,000
Gross Profit = $120,000 − $72,000 = $48,000 Gross Margin = (48,000 / 120,000) × 100 = 40% Net Profit = $48,000 − $28,000 − $4,000 = $16,000 Net Margin = (16,000 / 120,000) × 100 = 13.3%
Typical benchmarks by industry:
- Grocery stores: gross ~25%, net ~2–3%
- Software (SaaS): gross ~70–80%, net ~15–25%
- Restaurants: gross ~65%, net ~3–9%
- Retail clothing: gross ~50%, net ~5–10%
- Manufacturing: gross ~35%, net ~5–8%
A high gross margin with a low net margin means high operating costs — a common sign that overhead is eating profits.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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