Profit Margin Calculator
Calculate gross margin, net profit margin, and markup percentage. Understand your business profitability and pricing strategy at a glance.
Direct costs to produce goods/services
Rent, salaries, marketing, utilities, etc.
Net Profit Margin
20.0%
ExcellentNet Profit
$20,000
Profit Breakdown
Margin: 40.0%
Margin: 20.0%
Gross Margin
40.0%
Net Margin
20.0%
Markup
66.7%
Understanding Your Margins:
- Gross Margin: What's left after direct costs (COGS)
- Net Margin: Actual profit after all expenses
- Markup: How much you mark up cost to set price
Excellent Profitability!
Your 20%+ net margin indicates a healthy, profitable business with good cost control.
Industry Benchmarks
SaaS
70-90%
Gross Margin
E-commerce
30-50%
Gross Margin
Retail
20-40%
Gross Margin
Services
50-70%
Gross Margin
Net margins typically range from 5-20% depending on industry and business model
Formulas Used
Gross Margin
(Revenue - COGS) / Revenue × 100
Shows profitability before operating expenses. Higher is better.
Net Margin
Net Profit / Revenue × 100
Bottom line profitability after all expenses. The ultimate measure.
Markup
Gross Profit / COGS × 100
How much you add to cost to determine selling price.
Official References
Learn more about profit margins and business profitability:
- SBA: Measure Business Performance
Small Business Administration guidance on financial metrics
- Understanding Profit Margins
Comprehensive guide to profit margin calculations
- IRS Business Structures
How business structure affects profitability and taxes
This calculator provides estimates based on your inputs. Actual profitability may vary based on additional factors and accounting methods.