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Profit Margin Calculator Calculate gross margin, net margin, and markup percentage from revenue and costs.

Profit Margin Calculator illustration
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Profit Margin Calculator

Calculate gross margin, net margin, and markup percentage from revenue and costs.

1

Enter Revenue

Input your total revenue or selling price.

2

Enter Costs

Input cost of goods sold (COGS) and optionally operating expenses.

3

View Margins

See gross margin, net margin, and markup percentages with full breakdown.

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What Is Profit Margin Calculator?

A profit margin calculator determines how much of each dollar of revenue represents profit. It computes three key metrics: gross profit margin ((Revenue − COGS) / Revenue × 100), which shows profitability before operating expenses; net profit margin ((Revenue − COGS − Expenses) / Revenue × 100), which shows overall profitability; and markup ((Revenue − COGS) / COGS × 100), which expresses profit as a percentage of cost. These metrics are essential for pricing products, comparing business performance across companies or industries, and tracking financial health over time. A high gross margin indicates efficient production, while a healthy net margin indicates overall operational efficiency.

Why Use Profit Margin Calculator?

  • Calculates gross margin, net margin, and markup simultaneously
  • Separates COGS from operating expenses for granular analysis
  • Shows the complete revenue-to-profit breakdown
  • Includes formula reference for each metric
  • Color-coded profit/loss indicators

Common Use Cases

Product Pricing

Set prices that achieve your target profit margin.

Business Analysis

Compare profitability across products, departments, or time periods.

Competitive Analysis

Benchmark your margins against industry averages.

Financial Reporting

Calculate margins for financial statements and investor presentations.

Technical Guide

Gross Profit = Revenue − COGS. Gross Margin = Gross Profit / Revenue × 100. Net Profit = Revenue − COGS − Operating Expenses. Net Margin = Net Profit / Revenue × 100. Markup = Gross Profit / COGS × 100. The critical distinction between margin and markup: margin is profit as a percentage of revenue (the selling price), while markup is profit as a percentage of cost. A 50% markup on a $100 cost gives a $150 price and a 33.3% margin, not 50%. The relationship is: Markup% = Margin% / (100% − Margin%). Industry-standard margins vary widely: software companies may have 80%+ gross margins, while grocery stores operate on 2-5% net margins. Both are viable when revenue volumes are appropriate.

Tips & Best Practices

  • 1
    Margin ≠ Markup — a 50% markup is only a 33.3% margin
  • 2
    Compare your margins to industry benchmarks for context
  • 3
    Gross margin shows production efficiency; net margin shows overall efficiency
  • 4
    Higher revenue doesn't always mean higher margins
  • 5
    Track margins over time to spot trends in profitability

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Frequently Asked Questions

Q What is the difference between margin and markup?
Margin is profit as a percentage of the selling price (revenue). Markup is profit as a percentage of cost. A 50% markup on $100 cost = $150 price = 33.3% margin.
Q What is a good profit margin?
It varies by industry. Software: 60-80% gross margin. Retail: 40-60%. Restaurants: 3-9% net margin. Compare to your industry's benchmarks.
Q What is COGS?
Cost of Goods Sold — the direct costs of producing what you sell (materials, direct labor). Excludes overhead like rent and marketing.
Q Why is net margin lower than gross margin?
Net margin subtracts operating expenses (rent, salaries, marketing, etc.) in addition to COGS, giving a more complete picture of profitability.
Q How do I increase my profit margin?
Either increase revenue (raise prices, sell more) or decrease costs (reduce COGS, cut expenses). Focus on the lever that's most practical for your situation.

About This Tool

Profit Margin Calculator is a free online tool by FreeToolkit.ai. All processing happens directly in your browser — your data never leaves your device. No registration or installation required.