Profit Margin Calculator

Calculate gross profit, net profit, profit margins and markup from revenue, cost of goods sold and operating expenses.

Before you calculate

Net profit here subtracts entered operating expenses from gross profit. Include interest and taxes in expenses if you want an after-tax estimate.

Total Revenue

Total sales income before any deductions.

Cost of Goods Sold

Direct costs to produce your goods or services.

Operating Expenses (optional)

Rent, salaries, marketing, overhead — excludes COGS.

Gross Margin %

40.00%

Gross Profit	$40,000.00
Net Margin %	25.00%
Net Profit	$25,000.00
Revenue	$100,000.00
Markup on COGS	66.67%

Gross margin shows how efficiently you produce revenue after direct costs. Net margin — which also deducts operating expenses — reveals true profitability. Most healthy businesses target gross margins above 40% and positive net margins.

Gross vs. Net Profit Margin

Gross profit margin measures the percentage of revenue remaining after subtracting the Cost of Goods Sold (COGS). Net profit margin goes further by also deducting operating expenses such as rent, salaries, and marketing. Markup is a related metric that expresses profit as a percentage of cost rather than revenue.

Gross Profit = Revenue − COGS  |  Gross Margin % = Gross Profit / Revenue × 100  |  Net Profit = Gross Profit − Operating Expenses  |  Net Margin % = Net Profit / Revenue × 100  |  Markup % = (Revenue − COGS) / COGS × 100

Example Scenarios

SaaS Business with High Gross Margin

A software company with $500,000 revenue and $50,000 in server/support costs (COGS) has a 90% gross margin. After $300,000 in R&D and sales expenses (operating), the net margin is 30%. High gross margins give SaaS companies flexibility to invest in growth.

Retail Business with Thin Margins

A grocery store with $1M revenue, $750K COGS, and $200K operating expenses earns a 25% gross margin and just 5% net margin. Small changes in COGS pricing (supplier negotiations) or operating efficiency have outsized impact on profitability.

Methodology & Assumptions

Gross profit = revenue − COGS. Gross margin % = grossProfit / revenue × 100. Net profit = grossProfit − operatingExpenses. Net margin % = netProfit / revenue × 100. Markup = (revenue − COGS) / COGS × 100 (undefined when COGS = 0).

Sources & calculation notes

Maintained by MoneyCalc. Results are estimates based on the inputs and assumptions shown, not personalized financial advice or a lender quote. Default rates are examples unless a specific tax year or official table is identified.

References explain the underlying concepts or rules. They do not endorse or independently certify this implementation.

SBA: break-even analysis

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