📊 Profit Margin Calculator

Calculate your business profit margins to understand profitability. This calculator computes gross, net, and operating profit margins based on your revenue and costs.

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Understanding Profit Margins
Types of Profit Margins
  • Gross Margin: Revenue minus cost of goods sold (COGS)
  • Operating Margin: Gross profit minus operating expenses
  • Net Margin: Final profit after all expenses, taxes, and interest
Good Profit Margin Benchmarks
Retail/E-commerce2-8%
Restaurants3-9%
Construction1.4-2.4%
Manufacturing5-15%
Software20-40%
Consulting15-30%
Banking15-30%
Insurance5-15%
Profit Margin Formulas
Gross Profit Margin

Gross Profit = Revenue - COGS

Gross Margin % = (Gross Profit / Revenue) × 100

Operating Profit Margin

Operating Profit = Gross Profit - Operating Expenses

Operating Margin % = (Operating Profit / Revenue) × 100

Net Profit Margin

Net Profit = Operating Profit - Taxes & Interest

Net Margin % = (Net Profit / Revenue) × 100

Why Profit Margins Matter
  • Measure business efficiency and profitability
  • Compare performance against industry benchmarks
  • Identify areas for cost reduction
  • Assist in strategic pricing decisions
  • Evaluate financial health for investors