Profit Margin Calculator
Calculate your gross margin and net margin from revenue, cost of goods sold, and operating expenses.
Optional, for net margin
Gross margin
40.0%
Net margin
25.0%
What Your Result Means
Gross margin shows the percentage of revenue left after covering the direct cost of producing your goods or services. Net margin goes further, subtracting operating expenses too - giving a clearer picture of overall profitability.
How It Is Calculated
Gross Margin % = (Revenue - COGS) / Revenue × 100
Net Margin % = (Revenue - COGS - Operating Expenses) / Revenue × 100
Worked Example
With $20,000 in revenue, $12,000 in cost of goods sold, and $3,000 in operating expenses: gross profit is $8,000 (40% gross margin), and net profit is $5,000 (25% net margin).
Important Assumptions
- Operating expenses are optional - leave blank to see gross margin only.
- Does not account for taxes or one-time, non-operating costs.
Frequently Asked Questions
- What's the difference between gross and net margin?
- Gross margin only accounts for the direct cost of goods sold. Net margin also subtracts operating expenses like rent, salaries, and marketing, giving a more complete profitability picture.
- Is margin the same as markup?
- No - margin is profit as a percentage of selling price, while markup is profit as a percentage of cost. Use our Markup Calculator to see the distinction clearly.
Related Calculators
Methodology
This calculator uses standard gross and net margin formulas used in business accounting. See our methodology page for details.
Results depend entirely on the assumptions and figures you enter. Actual business performance may differ. This calculator does not provide accounting, tax, or legal advice.