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Profit Margin Calculator

Calculate gross profit, net profit, and profit margins to analyze business profitability and pricing strategy.
Decision Context
Page-specific guidance for using this result in a real planning decision.

Use this calculator to convert revenue and cost inputs into margin, markup, and profitability views that are easier to compare across offers or products.

It is useful for product pricing, service quoting, budgeting, and quick profitability checks when multiple cost assumptions are changing at once.

Margin is most valuable when tracked over several scenarios, because a healthy-looking percentage can still produce weak profit dollars if volume is low.

Calculator
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Direct costs to produce or acquire products sold

Indirect costs like rent, salaries, marketing, utilities

Analysis
Interpretation of the current calculator output

Enter values to see detailed analysis and insights.

How to Use

Step-by-step instructions
  1. 1Enter your total revenue (sales)
  2. 2Input Cost of Goods Sold (COGS) - direct production/acquisition costs
  3. 3Add operating expenses (rent, salaries, marketing, etc.)
  4. 4Review gross margin, net margin, and markup percentages
  5. 5Compare with industry benchmarks to assess competitiveness

Profit Margin Formulas

Profit margins measure profitability as a percentage of revenue. Gross margin shows profit after direct costs, while net margin accounts for all expenses.
Gross Margin = (Revenue - COGS) ÷ Revenue × 100% Net Margin = (Revenue - COGS - Operating Expenses) ÷ Revenue × 100%

Variables:

RevenueTotal sales income
COGSCost of Goods Sold - direct costs to produce/acquire products
Operating ExpensesIndirect costs like rent, marketing, salaries
Markup(Gross Profit ÷ COGS) × 100%

Example

Retail Business Example

Inputs:

Revenue:$100,000
COGS:$60,000
Operating Expenses:$25,000

Steps:

  1. 1.Gross Profit = $100,000 - $60,000 = $40,000
  2. 2.Gross Margin = ($40,000 ÷ $100,000) × 100 = 40%
  3. 3.Net Profit = $40,000 - $25,000 = $15,000
  4. 4.Net Margin = ($15,000 ÷ $100,000) × 100 = 15%
  5. 5.Markup = ($40,000 ÷ $60,000) × 100 = 66.7%
Result:
40% gross margin, 15% net margin, 66.7% markup on cost

Frequently Asked Questions

What's a healthy profit margin?

Varies by industry. Retail 2-5%, restaurants 3-5%, software 60-80%, professional services 15-20%. Compare with your industry benchmarks.

What's the difference between margin and markup?

Margin is profit as % of selling price. Markup is profit as % of cost. A 50% margin equals 100% markup (if cost is $50, price is $100).

How can I improve my profit margin?

Increase prices, reduce COGS through better supplier negotiations or efficiency, cut operating expenses, or shift to higher-margin products/services.
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Specific Guides
Focused pages for closely related calculation questions.
Profit Margin Calculator With Markup

Estimate profit margin and markup together so pricing decisions are easier to compare for products, services, and small business planning.