What is profit margin?

Profit margin is a key metric that measures a company's profitability, calculated as: (Profit ÷ Revenue) × 100%. Common types include Gross Margin (revenue minus cost of goods sold), Net Margin (after all expenses), and Markup (percentage above cost). Gross margin reflects core business profitability, while net margin shows the bottom line after all costs.

What's the difference between gross margin and markup?

Gross Margin = (Selling Price - Cost) ÷ Selling Price × 100%, showing profit as a percentage of revenue. Markup = (Selling Price - Cost) ÷ Cost × 100%, showing how much you added on top of cost. Example: Cost $100, Selling $150 → Gross Margin = 33.3% (50/150), Markup = 50% (50/100).

How can I improve my profit margins?

Ways to improve margins: 1) Raise prices if the market allows; 2) Reduce procurement or production costs; 3) Optimize operations to reduce overhead; 4) Add product value to justify higher pricing; 5) Negotiate bulk discounts with suppliers.

What is a good profit margin?

There's no universal 'good' margin — it depends on your industry. Retail typically aims for 20-50% gross margin, SaaS companies 70-90%, restaurants 30-60%, and manufacturing 15-30%. The key is that margins must cover fixed costs and generate reasonable net profit.

Is my data sent to a server?

No. All calculations happen locally in your browser. No data is ever transmitted to any server.

Free Profit Margin Calculator - Gross & Net Margin

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📚 Formulas

Gross Margin: Measures core business profitability

Gross Margin = (Selling Price - Cost) ÷ Selling Price × 100%

Markup: Shows how much you added on top of cost

Markup = (Selling Price - Cost) ÷ Cost × 100%

Net Margin: Bottom-line profitability after all expenses

Net Margin = (Revenue - COGS - Expenses - Taxes) ÷ Revenue × 100%

💡 Use Cases

• E-commerce Sellers: Determine optimal pricing and ensure healthy profit margins

• Entrepreneurs: Evaluate business model viability and set pricing strategies

• Financial Analysis: Analyze profitability across product lines

• Procurement: Compare supplier costs and their impact on margins