Profit Margin Calculator
Calculate gross, operating and net profit margin from revenue and costs, plus gross profit and markup — for one product or a whole business.
Profit margin tells you how much of each dollar of revenue you keep as profit. Gross margin looks only at the direct cost of what you sold; operating margin also subtracts overheads such as rent and salaries; net margin takes off interest and taxes as well. Enter a price and cost to price one product, or a full set of figures from your income statement to see all three margins.
How to use this tool
- Enter revenue — or the selling price of one item.
- Enter the cost of goods sold — or the unit cost of that item.
- For a whole business, add operating expenses and then interest and taxes.
- Read the margins, and use the profit summary table to see where the money goes.
Formula
Gross margin = (Revenue − COGS) ÷ Revenue × 100
Operating margin = (Gross profit − Operating expenses) ÷ Revenue × 100
Net margin = (Operating profit − Interest − Taxes) ÷ Revenue × 100
Markup uses cost as the base instead of revenue: Markup = Gross profit ÷ COGS × 100. A 40% margin equals a 66.7% markup, so the two are not interchangeable.
Example
A shop has $250,000 of revenue and $150,000 cost of goods sold, so gross profit is $100,000 and the gross margin is 40% (a 66.67% markup). After $60,000 of operating expenses, the operating profit is $40,000, a 16% operating margin. Paying $15,000 of interest and tax leaves $25,000 net profit — a 10% net margin.
Frequently asked questions
What is a good profit margin?
It depends heavily on the industry. Compare the same margin definition, accounting treatment and reporting period. Compare your margin with businesses like yours and with your own past results.
What is the difference between margin and markup?
Both use the same profit. Margin divides it by the selling price, markup divides it by the cost. Gross margin reaches 100% when cost is zero; markup is then undefined. With positive cost, margin is below 100%, while markup has no fixed upper limit.
Should shipping and payment fees go in COGS?
Use the classification in your accounts consistently. Payment fees and outbound shipping may be operating expenses rather than COGS. Subtracting all variable selling costs measures contribution margin, which differs from accounting gross margin.
Last updated: 2026-10-30