Profit Margin Calculator
Gross profit margin, net margin, and markup for any product or business.
Understanding Profit Margins
Three margins matter: Gross margin = (Revenue - Cost of Goods) / Revenue. This shows how efficiently you produce or acquire what you sell. Operating margin = Operating Income / Revenue. This includes rent, salaries, marketing, and other overhead. Net margin = Net Income / Revenue. This is the bottom line after everything including taxes and interest. A business with 60% gross margin but 5% net margin is not necessarily unhealthy — it depends heavily on the industry and growth stage.
Margin Benchmarks by Industry
Software/SaaS: 70-85% gross, 15-25% net. Retail: 25-50% gross, 2-5% net. Restaurants: 60-70% gross, 3-9% net. Manufacturing: 25-35% gross, 5-10% net. Professional services: 50-70% gross, 10-20% net. Comparing your margin to the wrong industry benchmark leads to bad decisions. A 5% net margin in grocery retail is excellent — the same margin in software is a red flag.
Average US net profit margin is 7.7%. Software companies average 20-25%, groceries just 1-3%.
