Profit Margin Calculator
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Result
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This free profit margin calculator finds your gross margin, net margin, net profit and markup from three numbers: revenue, cost of goods or direct costs, and operating expenses. Use it for a product, a store or a whole business over a month or a year. The formulas show with the result. Free, no sign-up, and it runs in your browser.
Enter your numbers below
Your output will appear here.
See how much of each sales dollar you keep after direct costs, and after operating expenses too.
Get markup next to margin, so you can see both views of the same profit without a second calculator.
Each result comes with the formula explained underneath, so you can check the math or reuse it in a spreadsheet.
Copy the figures into a report, pricing sheet or email, then change inputs to compare scenarios.
Three steps from a blank form to a result you can use.
Fill in Revenue, Cost of goods / direct costs and Operating expenses for the same period. Example defaults show how it works.
The calculator shows gross margin, net margin, net profit and markup with a full breakdown.
Copy the results, or change one input at a time to see how a price or cost change moves your margin.
Profit margin shows what share of revenue you keep as profit. Gross margin looks only at direct costs, while net margin also takes out operating expenses.
Use the same period for all three numbers. Mixing a month of revenue with a year of expenses gives a margin that means nothing.
These are the standard formulas for the four results. Gross margin and markup share the same top line, gross profit. Only the bottom line changes.
| Result | Formula | What it tells you |
|---|---|---|
| Gross profit | Revenue minus cost of goods | Money left after direct costs |
| Gross margin | Gross profit ÷ revenue × 100 | How efficiently you make or source what you sell |
| Net profit | Revenue minus cost of goods minus operating expenses | What the business actually keeps |
| Net margin | Net profit ÷ revenue × 100 | Whether the whole operation pays its way |
| Markup | Gross profit ÷ cost of goods × 100 | How far your price sits above your cost |
A formal net margin also subtracts interest and taxes. This calculator has one field for expenses, so include interest and taxes in Operating expenses if you want an after tax figure.
Example: This is an illustration, not real business data. An online store sells $50,000 of products in a quarter. The products cost $30,000 to buy and ship in. Rent, software, ads and wages for the same quarter come to $12,000.
We read this as healthy product pricing with heavy running costs. Operating expenses take 24 of the 40 cents of gross profit on each dollar. Cutting $2,000 of expenses lifts net margin to 20%, the same effect as a large price rise.
Margin and markup use the same profit but divide by different numbers. Margin divides by revenue, the selling price. Markup divides by cost. With a positive profit, markup is always the larger number, which is why mixing them up leads to underpricing.
If you want a 40% margin and you add 40% to your cost, you get a 40% markup, which is only a 28.6% margin. To convert a target margin into the markup you need, use markup = margin ÷ (1 minus margin).
| Target margin | Markup needed |
|---|---|
| 20% | 25% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
We suggest setting targets as margins and pricing with the matching markup. Margins compare easily across products and against your total expenses.
This calculator works at the business or product level: revenue, cost of goods and overheads for a period. It fits shops, product sellers and owners checking a full profit and loss view.
Service teams that bill clients by project usually need a different view. A project margin calculator starts from hours spent and an internal cost per hour, then shows the margin and effective hourly rate on one client job. Use this page for the whole business and a project margin calculator for single projects.
Quick answers about the Profit Margin Calculator.
Subtract costs from revenue, then divide the result by revenue and multiply by 100. For gross margin, subtract only cost of goods. For net margin, also subtract operating expenses. With $50,000 revenue, $30,000 cost of goods and $12,000 expenses, gross margin is 40% and net margin is 16%.
Gross margin shows what is left after direct costs, the cost of making or buying what you sold. Net margin also takes out operating expenses such as rent, software and admin wages. Gross margin tells you about pricing and sourcing. Net margin tells you whether the business as a whole makes money.
No. Both use gross profit, but margin divides it by revenue and markup divides it by cost. A product that costs $60 and sells for $100 has a 40% margin and a 66.7% markup. Pricing with a markup when you meant a margin is a common way to undercharge.
Put costs that rise with each sale in Cost of goods / direct costs: stock, materials, packaging, shipping in, and labor spent making the product. Put fixed running costs in Operating expenses: rent, software, marketing, insurance and admin salaries. A wrong split changes gross margin but not net profit.
Yes. Treat the direct cost of delivering the service, such as contractor fees or delivery staff time, as cost of goods, and the rest as operating expenses. To check margin on a single client project based on hours and cost per hour, a project margin calculator is a better fit.
No. The calculator is free, needs no account and runs in your browser, so the numbers you enter are not sent anywhere. Copy your results before you close the page if you want to keep them, since the calculator does not save past calculations for you.
This free project margin calculator shows whether a client project made money.
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