Profit Margin Calculator

Gross margin is revenue minus cost of goods sold, divided by revenue. Operating margin subtracts operating expenses (rent, salaries, marketing). Net margin subtracts everything, including interest, taxes, and depreciation. They each tell you something different about how the business runs.

Profit margin = (revenue − costs) ÷ revenue, expressed as a percentage. The "costs" you subtract depends on which margin you mean: COGS for gross margin, COGS plus operating expenses for operating margin, all expenses for net margin.

It depends heavily on the industry. Software businesses regularly run 70-90% gross margins and 20-30% net margins. Retail and grocery often live on 1-5% net margins. Compare against direct competitors and industry benchmarks rather than against an absolute number.

No. Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. A 50% markup is only a 33% margin. Confusing these is one of the most common pricing mistakes; if you want a 40% gross margin, set price = cost ÷ (1 − 0.40), not cost × 1.40.

Your total expenses (COGS + operating + other) exceeded revenue for the period. That can be normal for a growing business in early stages, or it can be a sign of pricing or cost problems. Look at gross margin first; if gross margin is positive but net is negative, the issue is fixed costs or overhead, not pricing.

Any consistent period works. For internal management decisions, monthly is most useful. For comparison to public companies and benchmarks, use trailing 12 months or annual. Just keep all four input fields on the same time period.