Finance
Profit Margin Calculator
Calculate gross profit margin percentage for any product or business using revenue and cost.
Gross Margin
β
How It Works
Gross Profit Margin = ((Revenue β COGS) / Revenue) Γ 100. COGS is the direct cost of producing the goods sold. Margin is expressed as a percentage of revenue, while markup is expressed as a percentage of cost.
Example
Revenue $50,000, COGS $32,000 β Gross Profit = $18,000 β Gross Margin = 36%.
Frequently Asked Questions
What is a good profit margin?
It varies by industry. Retail averages 2β5%, software 60β80%, restaurants 3β9%, manufacturing 5β20%. Compare to your industry benchmark.
What is the difference between margin and markup?
Margin is profit divided by revenue. Markup is profit divided by cost. A 50% markup equals a 33% margin.
What is net profit margin?
Net profit margin subtracts ALL expenses (operating costs, taxes, interest) from revenue before dividing by revenue. It is a more comprehensive measure than gross margin.