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Free Profit Margin
Calculator
Calculate gross margin, net margin, markup percentage, and profit per unit instantly. Built for small businesses — no login required.
Why Use This Calculator
Make smarter pricing decisions
Understand your true profitability
See gross margin, net margin, markup, and per-unit profit all in one place — no spreadsheet needed.
Spot pricing and cost issues
Compare your margins against industry benchmarks to identify where to optimize pricing or reduce costs.
Make better business decisions
Use your margin data to set prices, negotiate with suppliers, and forecast profitability before it hits your bank account.
What is Profit Margin?
Profit margin measures how much of every dollar in revenue a business keeps as profit. It is one of the most important financial metrics for understanding business health and sustainability.
There are two main types of profit margin. Gross profit margin measures revenue minus the direct cost of goods sold (COGS) — the costs directly tied to producing your product or service. Net profit margin goes further, also subtracting operating expenses like rent, payroll, insurance, and marketing.
A higher profit margin means your business retains more money from each sale, leaving more room for growth, reinvestment, and handling unexpected costs.
How to Calculate Profit Margin
Gross Profit Margin
((Revenue − COGS) ÷ Revenue) × 100
Net Profit Margin
((Revenue − COGS − Operating Expenses) ÷ Revenue) × 100
Markup Percentage
((Revenue − COGS) ÷ COGS) × 100
For example, if you sell a product for $100, your COGS is $55, and operating expenses are $20 per unit, then your gross margin is 45%, net margin is 25%, and markup is 81.8%.
Margin vs. Markup: What's the Difference?
Margin and markup both describe the relationship between cost and selling price, but from different perspectives.
Margin is the percentage of the selling price that is profit. If you sell something for $100 and your profit is $40, your margin is 40%.
Markup is the percentage added on top of cost to reach the selling price. If your cost is $60 and you sell for $100, your markup is 66.7%.
The same transaction has different margin and markup numbers. Understanding both helps you set prices correctly and communicate clearly with suppliers, accountants, and partners.
What is a Good Profit Margin?
Profit margins vary significantly by industry. Here are typical gross margin ranges for common business types:
Retail25–50%
Restaurants25–35%
Service businesses50–80%
Software / SaaS70–90%
Manufacturing20–35%
E-commerce30–50%
Net profit margins are typically lower — between 5% and 20% for most small businesses after accounting for all operating costs. The most important thing is to track your margins consistently over time and understand what drives changes.
Frequently Asked Questions
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