Profit Margin Calculator
Calculate gross, net, and operating profit margins.
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Frequently Asked Questions
What is the difference between margin and markup? +
Margin is profit as a percentage of revenue (selling price), while markup is profit as a percentage of cost. A product costing $60 sold for $100 has a 40% margin but a 66.7% markup. Margin is always lower than markup for the same transaction.
How do I calculate gross profit margin? +
Gross profit margin = ((Revenue - Cost of Goods Sold) / Revenue) x 100. This measures how much of each dollar of revenue remains after covering direct production costs.
What is a good profit margin for a business? +
It varies by industry. Software companies often see 60-80% gross margins, retail typically 25-50%, and restaurants 3-9% net margins. Compare your margin to industry benchmarks rather than a universal standard.
What is the difference between gross, operating, and net margin? +
Gross margin only subtracts direct costs (COGS). Operating margin also subtracts operating expenses like rent, salaries, and utilities. Net margin subtracts everything including taxes and interest, showing final bottom-line profitability.
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