Profit Margin Calculator
Calculate profit margin, markup percentage, gross profit, and net profit. Compare margin vs markup and see the impact of costs on profitability.
How to Use This Calculator
- Choose your calculation mode (simple or advanced)
- Enter your revenue or selling price
- Input your cost of goods sold (COGS)
- Add operating expenses for net profit calculations (optional)
- Include taxes for after-tax profit analysis (optional)
- Click Calculate to see your profit margins and insights
Calculation Mode
Revenue & Cost
Quick Scenarios (Optional)
Load industry-typical values to compare against benchmarks📊 Understanding Profit Margin
Profit margin measures how much of each dollar of revenue a business keeps as profit. It's one of the most important metrics for evaluating business health and comparing companies within the same industry. Higher margins typically indicate better cost control and pricing power.
💰 Key Profitability Metrics Explained
- Gross Profit Margin: (Revenue - COGS) ÷ Revenue × 100. Shows profitability after direct costs.
- Operating Margin: Operating Income ÷ Revenue × 100. Shows profitability from core operations.
- Net Profit Margin: Net Income ÷ Revenue × 100. The "bottom line" after all expenses and taxes.
- Markup: (Selling Price - Cost) ÷ Cost × 100. The percentage added to cost to get selling price.
- EBITDA Margin: Earnings Before Interest, Taxes, Depreciation & Amortization ÷ Revenue × 100.
⚖️ Margin vs Markup: Key Difference
Margin is based on revenue (selling price), while Markup is based on cost.
- Example: Buy for $60, sell for $100
- Margin: $40 ÷ $100 = 40% margin
- Markup: $40 ÷ $60 = 66.67% markup
Pro Tip: A 50% margin equals a 100% markup. A 33% margin equals a 50% markup.
📈 Industry Benchmark Profit Margins
- Software/SaaS: 70-85% gross, 15-25% net
- Retail: 25-50% gross, 2-5% net
- Manufacturing: 25-35% gross, 5-10% net
- Restaurants: 60-70% gross, 3-9% net
- Professional Services: 50-70% gross, 10-20% net
Note: Benchmarks vary significantly by sub-industry and business model.
⚠️ Important Considerations
- High revenue with low margins may still be less profitable than low revenue with high margins
- Margins should be compared within the same industry - cross-industry comparisons are misleading
- Seasonal businesses may have varying margins throughout the year
- One-time expenses or income can distort margin calculations
- Gross margin doesn't account for overhead - always consider net margin too
🔗 Save & Share Your Calculation
Your inputs are automatically saved in the URL. You can bookmark this page to save your calculation, or use the Share button to send it to partners, accountants, or team members. All values will be restored automatically.