Profit Margin Calculator
Calculate gross, operating, and net profit margins instantly. Includes markup, breakeven revenue, and industry benchmarks.
📊 Revenue & Costs
Net Profit Margin
0%
📐 Profit Margin Formulas
Gross Profit = Revenue − COGS
Gross Margin % = (Gross Profit ÷ Revenue) × 100
Operating Profit = Gross Profit − Operating Expenses
Operating Margin % = (Operating Profit ÷ Revenue) × 100
Net Profit = Operating Profit − Other (interest, taxes)
Net Margin % = (Net Profit ÷ Revenue) × 100
Markup % = (Gross Profit ÷ COGS) × 100
Breakeven Revenue = (Opex + Other) ÷ Gross Margin %
Gross Margin vs. Net Margin: Why Both Matter
Gross margin measures how efficiently your business converts sales into profit after production costs. A high gross margin (60%+) means you have room to cover operating expenses and still profit. Net margin is the bottom line — what the business keeps after every cost. Many businesses with impressive gross margins have thin or negative net margins due to high overhead.
Average Profit Margins by Industry
| Industry | Gross Margin | Net Margin |
|---|---|---|
| SaaS / Software | 70–85% | 15–25% |
| Consulting / Professional Services | 40–60% | 15–35% |
| E-commerce / Retail | 30–50% | 2–5% |
| Restaurants / Food Service | 60–70% | 3–9% |
| Manufacturing | 20–35% | 5–10% |
| Healthcare / Medical | 40–60% | 5–15% |
Markup vs. Margin — A Common Confusion
Markup and margin are often confused but measure different things. Markup is the profit as a percentage of cost. Margin is the profit as a percentage of revenue. A product costing $60 that sells for $100 has a 67% markup but a 40% gross margin. Retailers set prices using markup; investors evaluate performance using margin. This calculator shows both.
How to Improve Profit Margins
There are only four levers: raise prices, reduce COGS, cut operating expenses, or grow revenue faster than costs. Price increases are the highest-leverage action — a 1% price increase on $1M revenue adds $10,000 directly to profit without affecting volume. Reducing COGS through supplier negotiation or process improvement is the second most impactful lever. Cutting operating expenses helps but often has limits without affecting quality or growth.
Frequently Asked Questions
It depends heavily on industry. Retail: 2–5% net is typical. Restaurants: 3–9%. Consulting: 15–35%. SaaS: 15–25%. As a general benchmark, a net margin above 10% is considered healthy across most industries. The most important comparison is against your own industry average and your prior period.
Gross margin = (Revenue − COGS) ÷ Revenue. Measures production/delivery efficiency — how much revenue remains after the direct cost of making your product or delivering your service. Net margin = Net Profit ÷ Revenue. Measures overall business profitability after every cost — COGS, salaries, rent, interest, taxes. Always track both.
Markup = Gross Profit ÷ COGS × 100. Margin = Gross Profit ÷ Revenue × 100. Example: buy for $60, sell for $100. Markup = $40/$60 = 67%. Margin = $40/$100 = 40%. They measure the same profit dollars but from different reference points. A 50% markup equals a 33% margin. A 100% markup equals a 50% margin.
Breakeven revenue = Fixed Costs ÷ Gross Margin %. If your gross margin is 40% and your fixed costs (opex + other) are $65,000, you need $162,500 in revenue to break even. This calculator shows your breakeven in the results above. Below that revenue figure, you're operating at a loss.