Profit Margin Calculator
Calculate gross, operating, and net profit margins. Compare profitability across businesses or product lines.
What is Profit Margin Calculator?
The profit margin calculator shows three levels of profitability: gross (after direct costs), operating (after operating expenses), and net (after everything).
Formula
Gross margin = (revenue − COGS) / revenue. Operating margin = (gross profit − operating expenses) / revenue. Net margin = net income / revenue.
Worked example
Revenue $100k, COGS $60k, opex $25k, taxes $5k: gross 40%, operating 15%, net 10%. Net income: $10,000.
How to use this calculator
- Enter revenue, COGS, operating expenses, and taxes/interest.
- All three margins appear with net income.
Frequently asked questions
Industry-typical margins?
Software: 70%+ gross, 20–30% net. Restaurants: 60% gross, 5% net. Grocery: 25% gross, 1–3% net. Consulting: 50%+ gross, 15%+ net. Margins vary widely by industry.
What's a "good" net margin?
10%+ is generally healthy. 20%+ is excellent. Below 5% is challenging. Industry context matters — some industries have inherently lower margins (commodities, low-end retail).
Difference between gross and net margin?
Gross is just direct costs (materials, direct labor). Net includes everything (overhead, marketing, taxes, interest). Net is what shows on the income statement bottom line.
Should I focus on improving gross or net?
Both. Gross margin reflects pricing and direct cost management. Net margin reflects all overhead and indirect costs. Most businesses focus on gross first (more direct lever) then attack overhead.