Profit Margin Calculator 2026

Calculate your business's gross and net profit margins. Understand how efficiently your company converts revenue into profit.

Profit Margin Calculator

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Net Profit Margin

$30.00

30.0% of revenue is profit

Gross Profit Margin

$60.00

Gross Profit

$60,000.00

Net Profit

$30,000.00

How Calculated

Revenue$100,000.00
Cost of Goods$40,000.00
Operating Expenses$30,000.00
Tips
  • • Gross margin varies by industry - compare to benchmarks
  • • A 10% net margin is generally considered good

Related Calculators

Business Profit
ROI
Break-Even
Markup

Understanding Profit Margins

Profit margin is one of the most important metrics for any business. It shows what percentage of revenue becomes profit after accounting for costs. Understanding both gross and net margins helps you identify where you're making money and where you might be losing it.

Gross Margin vs. Net Margin

  • Gross margin: Revenue minus cost of goods sold (COGS). Shows profitability before operating expenses.
  • Net margin: Revenue minus ALL expenses (COGS, operating costs, taxes, interest). Shows true profitability.
  • Good gross margin: Varies by industry, but typically 30-50% for retail, 60-80% for services
  • Good net margin: 10% is considered good, 20% is excellent, 5% or less may indicate problems

Average Profit Margins by Industry

  • Software/SaaS: 70-80% gross margin, 15-25% net margin
  • Restaurants: 25-35% gross margin, 3-5% net margin
  • Retail: 25-50% gross margin, 2-5% net margin
  • Consulting: 50-70% gross margin, 10-20% net margin

Frequently Asked Questions About Profit Margins

A 'good' margin depends on your industry. For net margin, 10% is generally considered good, 20% excellent. Always compare to industry benchmarks since margins vary significantly between sectors.
Increase prices, reduce cost of goods sold, cut operating expenses, improve operational efficiency, focus on high-margin products/services, and reduce waste.
Margin is profit as a percentage of selling price (Profit ÷ Price). Markup is profit as a percentage of cost (Profit ÷ Cost). A 50% margin equals a 100% markup.
High operating expenses are likely the cause. Review rent, salaries, marketing, and other overhead costs. Consider where you can reduce expenses without impacting revenue.