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Profit Margin Calculator
Calculate gross and net profit margins for your business instantly. Enter your revenue, COGS, and operating expenses to see your profitability.
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Gross Profit
Gross Margin %
Net Profit
Net Margin %
Calculated in your browser. We never see your numbers.
How to Use This Calculator
Enter your total revenue (total sales), your Cost of Goods Sold (COGS — the direct costs to produce your product or service), and any additional operating expenses such as rent, salaries, and utilities. Click Calculate (or simply type) to see your gross profit, gross margin %, net profit, and net margin % instantly. All calculations run locally in your browser — no data is sent to any server.
Profit Margin Formulas
The calculator uses four formulas. Gross Profit = Revenue − COGS. Gross Margin % = (Gross Profit / Revenue) × 100. Net Profit = Revenue − COGS − Operating Expenses. Net Margin % = (Net Profit / Revenue) × 100. For example, with $100,000 revenue, $60,000 COGS, and $20,000 operating expenses: Gross Profit = $40,000 (40% margin), Net Profit = $20,000 (20% margin). Negative margins are valid and indicate a loss position.
Example Calculation
Suppose your business generates $250,000 in annual revenue with $150,000 in COGS and $50,000 in operating expenses. Your gross profit is $100,000 — a 40% gross margin. After operating expenses, your net profit is $50,000 — a 20% net margin. If COGS alone exceeded revenue (e.g., $280,000 COGS on $250,000 revenue), the gross margin would be negative at −12%, signalling that you are losing money on every unit sold before operating costs are even considered.
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Frequently Asked Questions
What is profit margin?
Profit margin is a financial metric that shows how much of your revenue is left over as profit after subtracting costs. It is expressed as a percentage: if you earn $100 in revenue and keep $25 as profit, your profit margin is 25%. Higher margins mean more profitability per dollar of sales.
What is the difference between gross margin and net margin?
Gross margin measures profit after subtracting only the Cost of Goods Sold (COGS) — the direct costs of producing your product or service. Net margin goes further and subtracts operating expenses (rent, salaries, utilities, etc.) as well. Gross margin tells you how efficient your production is; net margin tells you how much the overall business earns after all costs.
What is a good profit margin by industry?
Profit margins vary widely by industry. Software and technology companies often enjoy net margins of 20–30% or higher because of low marginal costs. Retail businesses typically see net margins of 2–5% due to high COGS and operating costs. Restaurants often operate at 3–9% net margin. Service-based businesses such as consulting can achieve 15–25% net margins. Compare your margins to industry benchmarks rather than a single universal standard.
What is the difference between margin and markup?
Margin and markup are related but different. Margin is calculated as profit divided by revenue (selling price), while markup is profit divided by cost. For example, if you buy an item for $60 and sell it for $100, your gross margin is 40% ($40 / $100) but your markup is 66.7% ($40 / $60). Confusing them can lead to significant pricing errors — always clarify which metric is being used.
How do I improve my profit margin?
There are two main levers: increasing revenue or reducing costs. On the revenue side, you can raise prices (if demand allows), upsell higher-margin products, or grow sales volume. On the cost side, negotiate better rates with suppliers, reduce waste, automate repetitive processes, or cut underperforming expenses. Even a 1–2% improvement in net margin can dramatically increase overall profitability at scale.
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