Profit Margin Calculator
Calculate your business profitability with our free profit margin calculator. Determine gross profit margin, net profit margin, and markup percentage to better understand your business finances.
Profit Margin Results
| Gross Profit | $0.00 |
|---|---|
| Gross Profit Margin | 0% |
| Net Profit | $0.00 |
| Net Profit Margin | 0% |
| Markup Percentage | 0% |
About Profit Margins
Profit margin is a key financial metric that shows what percentage of revenue has turned into profit. There are several types of profit margins, each providing different insights into your business's financial health.
Gross Profit Margin
Gross profit margin measures how much profit you make after accounting for the cost of goods sold (COGS). It shows the efficiency of your production process and pricing strategy.
Formula: Gross Profit Margin = (Revenue - COGS) / Revenue × 100%
Net Profit Margin
Net profit margin takes into account all business expenses, not just COGS. This includes operating expenses, taxes, interest, and other costs. It shows your overall profitability.
Formula: Net Profit Margin = (Revenue - COGS - Expenses - Taxes) / Revenue × 100%
Markup Percentage
Markup is the difference between the cost of a product and its selling price. It's expressed as a percentage above the cost.
Formula: Markup Percentage = (Revenue - COGS) / COGS × 100%
Why Profit Margins Matter
Tracking your profit margins helps you:
- Identify pricing issues
- Control costs more effectively
- Compare your performance to industry benchmarks
- Make informed business decisions
- Attract investors or secure loans
Industry Standards
Profit margins vary significantly by industry. For example:
- Retail: 2-5% net margin
- Restaurants: 3-5% net margin
- Software: 15-25% net margin
- Consulting: 10-20% net margin