Profit Margin Calculator
Calculate gross and net profit margins to optimize your pricing strategy.
Enter Your Numbers
$
$
Direct costs: materials, production labor, shipping
$
Rent, utilities, marketing, salaries, insurance
Gross Profit Margin
--%
Gross Profit: $0
Net Profit Margin
--%
Net Profit: $0
Industry Comparison
Retail (avg)
2-10%
Restaurants (avg)
3-9%
Services (avg)
15-30%
Software (avg)
20-40%
How It's Calculated
Gross Margin = (Revenue − COGS) ÷ Revenue × 100
Net Margin = (Revenue − COGS − Expenses) ÷ Revenue × 100
Frequently Asked Questions
What is a good profit margin?
A good net profit margin varies by industry. Generally, 10% is average, 20% is good, and 30%+ is excellent. Service businesses often achieve 15-30%, while retail typically sees 2-10%.
What's the difference between gross and net margin?
Gross margin only subtracts direct costs (COGS) from revenue. Net margin subtracts ALL expenses including rent, salaries, marketing, and taxes. Net margin shows your true profitability.
How do I improve my profit margin?
Three ways: raise prices, reduce COGS (negotiate with suppliers, reduce waste), or cut operating expenses. Often a combination works best.