Calculator Inputs
$
$
$
Results
$40,000.00
Gross Profit
40.0%
Gross Margin
$20,000.00
Net Profit
20.0%
Net Margin
66.7%
Markup on COGS
60.0%
COGS Ratio
About This Calculator
Understanding Profit Margins
Profit margin is the percentage of revenue that remains as profit after deducting costs. It's the single most important metric for measuring business health.
Industry Benchmarks
- Retail: 2-5% net margin
- Software/SaaS: 15-25% net margin
- Restaurants: 3-6% net margin
- Professional Services: 10-20% net margin
Frequently Asked Questions
Gross margin vs net margin — what's the difference?
Gross margin considers only COGS (direct production costs). Net margin includes all operating expenses like rent, payroll, marketing, and admin. Net margin shows your true bottom-line profitability.
What's a good profit margin?
It varies by industry. Generally, 10% net margin is healthy, 20% is excellent, and 5% or below may indicate pricing or cost issues. Compare against your specific industry benchmarks.