Profit Margin Calculator
Calculate your gross, operating, and net profit margins. Compare against industry benchmarks and get actionable tips to improve profitability.
Financial Details
Revenue & Expenses
Total sales and income for the year
Direct costs: materials, labor, shipping
Rent, salaries, marketing, admin costs
Interest, taxes, depreciation, one-time costs
Enter your revenue and expenses
to calculate profit margins
Understanding Profit Margins
Gross Margin
Shows how efficiently you produce and sell your core product or service. Higher is better - indicates strong pricing power and cost control.
Operating Margin
Measures profitability after all operating expenses. Shows how well you control overhead costs like rent, salaries, and marketing.
Net Margin
The bottom line - what percentage of revenue becomes actual profit after all expenses, taxes, and interest. The ultimate measure of efficiency.
Frequently Asked Questions
What's considered a good profit margin?
It varies by industry. Generally: Gross margin 40%+, Operating margin 10%+, Net margin 5%+ are healthy. High-margin businesses like SaaS can achieve 80%+ gross margins.
How can I improve my profit margins?
Focus on: 1) Raising prices (biggest impact), 2) Reducing COGS through better suppliers or efficiency, 3) Controlling operating expenses, 4) Improving product mix toward higher-margin items.
What's the difference between gross vs net margin?
Gross margin only considers direct costs (COGS), while net margin includes all expenses. A company can have high gross margins but low net margins due to high overhead costs.
Should I focus on margin or volume?
Both matter, but margin improvements often have bigger impact. A 10% price increase can double profits, while doubling volume doubles costs too. Start with margin optimization.
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