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Profit Margin Calculator
Enter your revenue and cost to see your gross profit margin, your markup on cost, and — if you add operating expenses — your net profit margin. One screen, the three numbers that drive your pricing and your bottom line.
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→ Your margins
Margin is not markup
A 40.0% margin and a 66.7% markup describe the same $40.00 of profit — margin divides by price, markup divides by cost. Price off the wrong one and you erode profit on every sale.
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Save the current inputs as a scenario, then compare best, base, and worst side by side. Saved in this browser.
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<iframe src="https://planypals.com/embed/profit-margin-calculator" title="Profit Margin Calculator" width="100%" height="760" loading="lazy" style="border:1px solid #ddd3bf;max-width:760px"></iframe> <p style="font:13px/1.5 sans-serif">Free <a href="https://planypals.com/tools/profit-margin-calculator">Profit Margin Calculator by Planypals</a></p>
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Get a clean PDF of your margin breakdown — gross margin, markup, and net margin in one page.
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Calculations run entirely in your browser. Figures are estimates for planning, not financial advice.
How profit margin is calculated
Profit margin is simply profit as a percentage of revenue — but there are three versions worth knowing, and they answer different questions. The calculator works them all from the same two inputs.
- Gross profit margin = (Revenue − Cost of goods sold) ÷ Revenue
- Markup on cost = (Revenue − Cost) ÷ Cost
- Net profit margin = (Revenue − Cost − Operating expenses) ÷ Revenue
Margin versus markup
The most common pricing error is treating margin and markup as the same number. They share the same dollar profit but divide it differently: margin by the selling price, markup by the cost. A $60 product sold for $100 carries a 40% margin and a 67% markup. Price off the wrong one and you quietly erode your profitability on every sale. If you price from cost up, the dedicated markup calculator works from cost and markup instead.
What counts as a healthy margin
It depends entirely on the industry, so compare within your sector rather than to a universal figure. Software and digital services often run gross margins of 70–90%; agencies and consultancies 40–60%; retail and e-commerce commonly 20–40%; restaurants and grocery far lower. Net margins compress all of these — a healthy net margin for many small businesses lands around 10–20%. The most useful comparison is against your own break-even: any margin above the point where you cover fixed costs is profit.
Gross, operating, and net margin
Three margins measure profitability at three depths. Gross margin is revenue minus the direct cost of what you sold — it shows whether the product itself is profitable. Operating margin subtracts operating expenses too, showing whether the business is profitable to run. Net margin takes out everything, including interest and taxes — the true bottom line. A business can post a strong gross margin and a negative net margin if overhead is too high, which is exactly what this calculator surfaces once you add operating expenses.
How to improve your profit margin
Price is the strongest tool here and the most overlooked: a small increase drops almost entirely to the bottom line and, unlike a cost cut, never touches product quality. Cost of goods is the next place to look — better sourcing, volume discounts, and less waste all widen the gross margin. Trimming overhead comes last and deserves the most caution, because cutting the marketing or the people who actually drive revenue is a false economy that shows up two quarters later.
What quietly erodes margin
- Confusing margin with markup. The single most common — and most expensive — pricing error.
- Leaving costs out of COGS. Payment fees, shipping, and packaging are real product costs; omitting them inflates your margin.
- Pricing off cost alone. Cost-plus pricing ignores what the market will pay and often leaves money on the table.
- Averaging across products. A blended margin can hide items you sell below contribution margin.
Margin is also what stands between you and your break-even point — every dollar of contribution margin goes toward covering fixed costs first. Find that crossover with our break-even calculator, and see how margins feed the bigger picture of your unit economics.
→ Beyond the calculator
Build your margins into a model investors trust
A single margin is a snapshot. When you are raising or borrowing, your margins need to live inside a driver-based financial model — flowing through pricing, volume, and costs into a full P&L, cash flow, and balance sheet. We build that model so the numbers hold up in diligence.
Frequently asked questions
- Profit margin is profit divided by revenue, shown as a percentage. Gross profit margin = (Revenue − Cost of goods sold) ÷ Revenue. Net profit margin = (Revenue − all costs, including operating expenses) ÷ Revenue. So if you sell something for $100 that costs $60, your gross profit is $40 and your gross margin is 40%.
- Margin and markup use the same dollar profit but a different base. Margin divides profit by the selling price; markup divides the same profit by the cost. A product that costs $60 and sells for $100 has a 40% margin ($40 ÷ $100) but a 67% markup ($40 ÷ $60). Confusing the two is a common pricing mistake — the calculator shows both at once.
- It depends entirely on the industry. Software and services often run gross margins of 70–90%, retail and restaurants far lower, and a healthy net margin for many small businesses lands somewhere around 10–20%. The useful comparison is against others in your own sector, and against your break-even point — any margin above break-even is profit.
- Raise your price, lower your cost of goods sold, or reduce operating expenses. Even a small price increase often improves margin more than a large cost cut, because it flows straight to the bottom line without touching product quality. Change one input at a time in the calculator to see which move helps most.
- Yes. It runs entirely in your browser, nothing is stored, and there is no sign-up. You can opt in to have the results emailed as a PDF. When you need these margins built into a full, defensible financial model, that is what our financial modeling service does.