Profit Margin Calculator
Free profit margin calculator — gross, operating, and net margins, plus stock trading margin and currency exchange margin modes.
Everyday Uses
Pricing products
Set prices that hit your target margin instead of guessing and hoping.
Product line triage
Compare margins across products to find the quiet losers on your shelf.
Freelance job screening
After expenses, what does that project really pay? Margin tells you which gigs to take.
Health checks for lenders
Margin trends are among the first things banks and investors examine.
Frequently Asked Questions
What is gross profit margin and how is it calculated?
Gross Profit Margin = ((Revenue − Cost of Goods Sold) ÷ Revenue) × 100%. COGS includes direct costs: raw materials, manufacturing labour, and direct overhead tied to production. It excludes operating expenses like rent, marketing, and salaries. Example: $500,000 revenue − $300,000 COGS = $200,000 gross profit ÷ $500,000 = 40% gross margin. Gross margin measures production efficiency and pricing power.
What is the difference between gross, operating, and net profit margin?
Three margin levels reflect different cost layers: Gross Margin = (Revenue − COGS) ÷ Revenue — covers production costs only. Operating Margin = (Revenue − COGS − Operating Expenses) ÷ Revenue — also deducts salaries, rent, marketing, and depreciation. Net Margin = Net Income ÷ Revenue — deducts everything including interest and taxes. A business may have a healthy 40% gross margin but only 8% net margin after all costs. Tracking all three reveals where profitability is leaking.
What are good profit margins by industry?
Profit margins vary enormously by sector (typical net margins): Software/SaaS: 20–40%. Banking & Financial Services: 15–30%. Pharmaceuticals: 15–25%. Technology hardware: 10–20%. Healthcare: 5–15%. Food & Beverage manufacturing: 5–10%. Retail (general): 2–5%. Grocery retail: 1–3%. Airlines and automotive: 2–5%. Construction: 2–6%. A "good" margin is one that exceeds your industry average and your cost of capital.
What is the difference between profit margin and markup?
Profit margin is calculated on selling price; markup is calculated on cost. If a product costs $60 and sells for $100: Margin = (100 − 60) ÷ 100 = 40%. Markup = (100 − 60) ÷ 60 = 66.7%. This distinction matters in pricing: a 50% markup does not equal 50% margin. Markup of 100% equals 50% margin; markup of 50% equals 33.3% margin. Retailers typically price using markup, while investors analyse margin.
How can a business improve its profit margin?
Strategies to improve margin fall into two categories: Increase revenue without proportionally increasing costs — raise prices (requires strong brand or low competition), upsell higher-margin products, improve conversion rates. Reduce costs — negotiate better supplier terms to lower COGS, reduce overhead (remote work, automation), improve operational efficiency, reduce waste and returns. The highest-leverage strategy depends on whether the bottleneck is gross margin (pricing/COGS issue) or operating margin (overhead/efficiency issue).
How does stock trading margin work?
Buying on margin means borrowing from your broker to buy more stock than your cash allows. With the standard 50% initial requirement, $10,000 of cash gives $20,000 of buying power (2× leverage). If your equity falls below the maintenance requirement (often 25%), you get a margin call. The stock margin mode calculates buying power, leverage, and the exact margin call price.
How is forex margin calculated?
Required margin = position size × exchange rate ÷ leverage. A standard lot (100,000 units) of EUR/USD at 1.0850 with 30:1 leverage requires about $3,617 of margin to control a $108,500 position. Regulators cap retail leverage (30:1 for major pairs in the EU, 50:1 in the US) precisely because high leverage wipes out accounts on small moves.