Profit Margin Calculator
Enter your revenue and costs to find your gross profit, gross margin %, net profit, and net margin %.
How Profit Margin Calculator works
Gross profit margin
Gross profit = Revenue − Cost of Goods Sold (COGS). Gross margin % = (Gross Profit ÷ Revenue) × 100. COGS includes direct costs: materials, direct labour, and manufacturing overhead — but not selling, marketing, or admin expenses.
Net profit margin
Net profit = Gross Profit − Operating Expenses. Net margin % = (Net Profit ÷ Revenue) × 100. Operating expenses include indirect costs such as rent, utilities, salaries, and marketing.
Margin vs markup
Margin is expressed as a percentage of selling price. Markup is expressed as a percentage of cost. A 50% markup gives a 33% margin. A 50% margin requires a 100% markup. The two are often confused — margin is the more common metric in financial reporting.
What is a good margin?
Average margins vary significantly by industry. Software and SaaS businesses often achieve gross margins above 70%. Retail typically ranges from 20–50%. Manufacturing may be 10–30%. Service businesses often achieve high gross margins but lower net margins due to labour costs.
Frequently asked questions
What is the difference between gross and net margin?
Gross margin only deducts direct production costs (COGS). Net margin deducts all costs including operating expenses, giving a truer picture of overall profitability.
How do I improve my profit margin?
Either increase revenue (raise prices or volume) or reduce costs (negotiate better COGS, cut operating expenses). Raising prices often has the largest impact since every extra pound of revenue drops straight to margin.
Is a higher margin always better?
Not necessarily. A low-margin, high-volume business (e.g., a supermarket) can generate more total profit than a high-margin, low-volume business. Total profit = revenue × margin.
What is a good gross margin for a UK small business?
This varies by sector. Services businesses (consulting, agencies) typically achieve 40–70% gross margins. Product-based businesses are more typically 30–50%. The key benchmark is whether margin is sufficient to cover operating expenses and generate a profit.
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