Profit margin calculator

Gross margin is revenue minus cost of goods sold, divided by revenue. Net margin is what's left after all expenses, divided by revenue. $100,000 of sales with $60,000 of costs is a 40% gross margin. Enter your numbers to see both margins and your markup.

Updated November 2026

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    Check my real numbers

    Use numbers from the same period on your profit and loss. An estimate, not tax advice.

    What is the difference between gross and net margin?

    Gross margin shows how much of each sale is left after the direct cost of what you sold: materials, inventory, direct labor. Net margin shows what's left after everything else too: rent, salaries, software, marketing and interest. A business can have a healthy gross margin and still lose money if overhead is too high.

    FormulaCalculation
    Gross profitRevenue minus cost of goods sold
    Gross marginGross profit divided by revenue
    Net profitGross profit minus operating expenses
    Net marginNet profit divided by revenue
    MarkupGross profit divided by cost of goods sold

    What is a good profit margin?

    It depends on the industry. Software and professional services often keep gross margins above 70%, while restaurants and retail live with far lower ones. Compare yourself with your own past results first. A falling margin is a warning even if sales are growing.

    Where do the numbers come from?

    From your profit and loss statement, for the same period. If your books aren't current, the margins won't be either. Our post on how to read a profit and loss statement walks through it, and the markup calculator turns a target margin into a price.

    Sources

    General information, not tax advice for your situation.

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    Questions

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    How do I calculate profit margin?

    Divide profit by revenue and multiply by 100. $40,000 of gross profit on $100,000 of revenue is a 40% gross margin.

    Is margin the same as markup?

    No. Margin divides profit by the selling price. Markup divides profit by cost. A 50% markup is a 33.3% margin.

    Should I use gross or net margin?

    Use gross margin to judge pricing and direct costs, and net margin to judge the whole business.

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