Calculate profit margin, markup, and gross profit from cost and revenue. Essential tool for business owners.
Profit margin is one of the most critical metrics for any business, showing what percentage of revenue becomes actual profit after costs. Gross profit margin measures the difference between revenue and cost of goods sold (COGS), while net profit margin accounts for all expenses including operating costs, taxes, and interest. A healthy margin varies by industry — retail typically targets 5–20%, while software companies often exceed 60–70%. Understanding your margins helps you set competitive prices, identify cost inefficiencies, and make informed decisions about scaling or cutting back. This calculator handles the math instantly so you can focus on strategy.
It depends heavily on your industry. Grocery stores often operate on 1–3% margins, while software businesses can achieve 70%+. Generally, a net profit margin above 10% is considered healthy for most businesses.
Margin is profit as a percentage of revenue (Profit ÷ Revenue × 100). Markup is profit as a percentage of cost (Profit ÷ Cost × 100). A 50% markup equals a 33% margin — they're different!
You can increase revenue (raise prices, sell more), reduce costs (negotiate suppliers, improve efficiency), or both. Even small margin improvements compound significantly at scale.
This calculator computes gross profit margin based on Revenue and Cost. For net margin including taxes, subtract your tax amount from profit before dividing by revenue.
Profit Margin (%) = (Revenue − Cost) ÷ Revenue × 100. For example, if you earn $10,000 and spend $7,000, your margin is ($10,000 − $7,000) ÷ $10,000 × 100 = 30%.