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💰 Profit Margin Calculator

Calculate gross margin, net margin, and markup instantly. Enter your revenue, cost of goods sold, and optional operating expenses to see a full profitability breakdown.

Profit Margin Formulas

Gross Profit = Revenue − COGS
Gross Margin = (Gross Profit ÷ Revenue) × 100
Net Profit = Gross Profit − Operating Expenses
Net Margin = (Net Profit ÷ Revenue) × 100
Markup = (Gross Profit ÷ COGS) × 100

Margin is expressed as a percentage of revenue, while markup is expressed as a percentage of cost. A 40% margin equals a 66.7% markup.

How to Calculate Profit Margin

  1. 1
    Enter Your Revenue
    Enter the total sales revenue for the period you want to analyse.
  2. 2
    Enter Cost of Goods Sold
    Enter the direct costs of producing your goods or services (materials, labour, etc.).
  3. 3
    Enter Operating Expenses
    Optionally add rent, salaries, marketing, and other overheads to see net margin.
  4. 4
    Read Your Results
    The calculator instantly shows gross profit, gross margin, net profit, net margin, and markup.

Real-World Example

A retailer has $50,000 in revenue and $30,000 in cost of goods sold.

Gross Profit = $50,000 − $30,000 = $20,000
Gross Margin = ($20,000 ÷ $50,000) × 100 = 40%
Markup = ($20,000 ÷ $30,000) × 100 = 66.7%

Frequently Asked Questions

It depends on the industry. Retail typically runs 2–5%, restaurants 3–9%, software companies 70–80%, and manufacturing 10–20%. Always compare against your industry benchmark.

Margin is gross profit as a percentage of revenue. Markup is gross profit as a percentage of cost. A 50% markup on a $10 cost gives a $15 price and a 33% margin — they measure the same dollars from different bases.

Gross margin only deducts the direct cost of producing goods (COGS). Net margin also deducts operating expenses like rent, salaries, and marketing, giving you the true bottom-line profitability.

You can raise prices, reduce COGS through better supplier negotiations, cut operating expenses, or increase volume to spread fixed costs. Often a small price increase has a larger impact than cutting costs.

Yes. A negative gross margin means you are selling below your production cost — unsustainable long-term. A negative net margin can be acceptable short-term (e.g. a startup investing in growth) but must eventually turn positive.

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