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Profit Margin Calculator

Calculate gross profit, net operating profit, margin percentages, and equivalent markup from revenue and expenses.

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How to Use the Profit Margin Calculator – Gross & Net Margins

1Enter total gross revenue or selling price ($).
2Enter cost of goods sold (COGS or wholesale cost in $).
3Optionally enter operating expenses (rent, marketing, software, payroll in $).
4Read the gross margin percentage, net profit margin, and equivalent markup.

Formula & How It Works

Gross & Net Margin Formulas

Gross Margin (%) = ((Revenue - COGS) ÷ Revenue) × 100% | Net Margin (%) = (Net Profit ÷ Revenue) × 100%

Gross Profit equals Revenue minus COGS; Gross Margin equals (Gross Profit / Revenue) × 100%. Net Profit equals Gross Profit minus Operating Expenses; Net Margin equals (Net Profit / Revenue) × 100%. For information only, not financial advice.

Worked Examples

Healthy Retail Business Benchmark

Input: Revenue: $100.00, COGS: $40.00, OpEx: $20.00

Explanation: Gross profit = $100 - $40 = $60 (60% margin). Net profit = $60 - $20 = $40 (40% net margin).

Result: Gross Margin: 60.0% ($60 profit) | Net Margin: 40.0% ($40 profit) | Markup: 150.0%

High Volume, Low Margin Grocery Store

Input: Revenue: $1,000,000, COGS: $850,000, OpEx: $120,000

Explanation: Gross profit = $150k (15% margin). Net profit = $30k (3% net margin, typical for supermarkets).

Result: Gross Margin: 15.0% ($150,000) | Net Margin: 3.0% ($30,000)

Software as a Service (SaaS)

Input: Revenue: $50,000, COGS: $5,000, OpEx: $25,000

Explanation: Low digital COGS yields a 90% gross margin, with 40% net margin after sales and R&D.

Result: Gross Margin: 90.0% ($45,000) | Net Margin: 40.0% ($20,000)

Freelance Service Project

Input: Revenue: $5,000, Direct Subcontractors: $1,500, Software Tools: $500

Explanation: Gross profit = $3,500 (70% gross). Net profit = $3,000 (60% net profit).

Result: Gross Margin: 70.0% ($3,500) | Net Margin: 60.0% ($3,000)

Frequently Asked Questions

What is considered a good profit margin?▼

A 10% net profit margin is considered average across US industries, 20% is considered good, and 5% is low. Retail typically runs on lower margins (2-5%), while software runs on higher margins (20-40%).

What is the difference between gross margin and net margin?▼

Gross margin considers only direct production costs (COGS). Net margin accounts for all company expenses, including administrative rent, marketing, taxes, and interest.

Can profit margin be negative?▼

Yes, if total costs exceed revenue, the business operates at a net loss, yielding a negative profit margin.

How do you turn a 30% margin into a markup?▼

Markup = Margin / (1 - Margin) = 0.30 / 0.70 = 42.86% markup.

Is this financial advice?▼

For information only, not financial advice. Calculations are mathematical estimates for planning purposes.

Does this tool work completely offline in my browser?▼

Yes, all calculation logic runs locally in your web browser with zero server latency.

Last reviewed & updated: 2026-11-01

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