Profit Margin Calculator
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Net Profit
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Net Margin %
0.0%
Gross Profit
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Gross Margin %
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Operating Profit
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Tax Amount
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Profit Margin shows what percentage of your revenue is actually profit after costs, rather than just the total revenue number. Business owners, investors, and lenders use it to judge how efficiently a company turns sales into real profit, and it is one of the fastest ways to compare the financial health of two businesses regardless of their size. A business with lower revenue but a healthier margin can easily be more profitable than a bigger competitor with thin margins.
Formula
Profit Margin = (Revenue - Total Cost) / Revenue x 100
Revenue is your total sales for the period, and Total Cost includes everything spent to generate that revenue, from cost of goods sold to overhead, so the exact number depends on which costs you choose to include in the calculation.
Example
Example: your business brings in $50,000 in revenue and total costs for the period are $35,000. Profit Margin = (50,000 - 35,000) / 50,000 x 100 = 30%. That means 30 cents of every dollar in sales was kept as profit after all costs were paid, before any owner draw or reinvestment decisions are made.
Industry Benchmark
20-30% net margin is often considered healthy for service businesses, while e-commerce typically runs lower, around 5-15%, due to product and fulfillment costs eating into each sale.
FAQ
What's a good profit margin?
It depends heavily on the industry. As general ranges, 20-30% net margin is often considered healthy for service businesses, while e-commerce businesses typically run lower, around 5-15%, because of product costs, shipping, and marketplace fees. Compare your margin against businesses in your own category rather than a blanket target, since a strong margin in one industry can be a weak one in another.
What's the difference between gross margin and net margin?
Gross margin only subtracts the direct cost of producing or acquiring what you sold, known as cost of goods sold. Net margin goes further and subtracts every other business expense too, including rent, salaries, marketing, and taxes. Net margin is always the lower, more honest number, since it reflects what you actually keep after every bill is paid.
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