Profit Margin Calculator

Enter your revenue and costs to instantly calculate gross margin, net margin, and markup percentage.

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Total income from sales
Direct costs to produce/deliver
Rent, marketing, payroll, insurance, and similar costs. Used for net margin calculation

Your Profit Margins

Gross Profit --
Gross Margin --
Markup Percentage --
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How to Use This Calculator

Enter your total revenue (selling price) and cost of goods sold (COGS) to calculate your gross profit margin. COGS includes the direct costs of producing your product or delivering your service, including materials, labor, and manufacturing costs.

If you also enter other operating expenses (rent, marketing, payroll, insurance), the calculator will show your net profit margin, which reflects your actual take-home profitability after all costs.

The markup percentage shows how much you've added on top of your costs. This is useful for pricing decisions: if your markup is 50%, you're charging 1.5× your cost.

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Understanding Profit Margins

Gross profit margin measures how efficiently you produce goods or deliver services. A higher gross margin means more money left over from each dollar of revenue to cover operating expenses and generate profit.

Net profit margin is the bottom line. It tells you what percentage of every dollar in revenue actually becomes profit after all expenses. For most small businesses, a net margin between 7% and 10% is considered healthy, though service-based businesses often achieve 15-20%.

Tracking your margins over time helps identify cost creep, pricing problems, and operational inefficiencies before they become critical. Calculate monthly and compare against industry averages.

Note: This calculator provides estimates for general informational purposes. It is not financial, tax, or legal advice. Your actual margins may differ based on accounting methods, tax obligations, and other factors specific to your business. Consult a qualified accountant or financial advisor for guidance on your situation.

Frequently Asked Questions

What is a good profit margin for a small business?
A good net profit margin for most small businesses is between 7% and 10%. Service businesses often achieve 15-20%, while retail and food businesses may operate at 3-5%. Compare your margin against your specific industry average for the most meaningful benchmark.
What is the difference between margin and markup?
Margin is the percentage of the selling price that is profit. Markup is the percentage added on top of cost to reach the selling price. A 50% markup on a $60 cost gives a $90 price, but the margin is 33.3% ($30 profit on $90 revenue). They use different base numbers: margin uses revenue as the denominator, markup uses cost.
How do I calculate gross profit margin?
Gross Profit Margin = ((Revenue − Cost of Goods Sold) ÷ Revenue) × 100. For example, if you sell a product for $100 and it costs $60 to make, your gross margin is 40%.
What is net profit margin?
Net profit margin accounts for all expenses, not just the cost of goods sold. It includes operating expenses, taxes, interest, depreciation, and any other costs. Net Margin = ((Revenue − All Expenses) ÷ Revenue) × 100. This is the truest measure of business profitability.

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