Business
Invoicing, margin & GST calculators
Profit Margin Calculator
Gross, operating & net profit margin — plus the price for a target margin. Accurate, instant and free — for United States.
What these mean:
Revenue of $50.00 less $30.00 cost of goods leaves $20.00 gross profit — a 40.0% gross margin (a 66.7% markup on cost).
Gross profit
$20.00
Gross margin
40.00%
Markup (on cost)
66.67%
Margin is not the same as markup
Convert between margin and markup or price from a markup with the Markup Calculator, or find the sales volume that covers your costs with the Break-Even Calculator.
Gross, operating & net margin
A profit margin is profit as a percentage of revenue. The three headline margins measure the same sales after progressively more costs — each one sits below the last, like a waterfall from the top line down to the bottom line.
Gross
after COGS
(revenue − COGS) ÷ revenue
Product economics — what each sale earns before overheads.
Operating
after OpEx
(gross − OpEx) ÷ revenue
How efficiently the business runs (EBIT margin).
Net
after interest + tax
(op − interest − tax) ÷ revenue
The bottom line — profit left for owners.
- 1Walk down the waterfall: Gross = 50 − 30 = $20. Operating = 20 − 4 = $16. Net = 16 − 3 − 3 = $10. Each divided by the $50 revenue gives the 40% / 32% / 20% margins.
- 2Take it further: Convert a margin into a markup or price a single item with the Markup Calculator, or find the sales volume that covers your costs with the Break-Even Calculator.
Margin → markup & target price
To price for a target margin, divide by (1 − margin): price = cost ÷ (1 − margin ÷ 100). The same margin expressed against cost is its markup — markup = margin ÷ (100 − margin).
| Margin | Equivalent markup | Price on a $30 cost |
|---|---|---|
| 10% | 11.1% | $33.33 |
| 20% | 25.0% | $37.50 |
| 30% | 42.9% | $42.86 |
| 40% | 66.7% | $50.00 |
| 50% | 100.0% | $60.00 |
| 60% | 150.0% | $75.00 |
| 75% | 300.0% | $120.00 |
Don't add the margin to cost
Frequently asked questions
They are the same income measured after progressively more costs. Gross margin = (revenue − cost of goods sold) ÷ revenue, and shows product-level economics. Operating margin also subtracts operating expenses (rent, salaries, marketing) and shows how efficiently the business runs. Net margin further subtracts interest and tax — it is the true bottom line, the profit left for owners. On $50 revenue with $30 COGS, $4 opex, $3 interest and $3 tax: gross $20 (40%), operating $16 (32%), net $10 (20%).
Profit margin % = profit ÷ revenue × 100. First find the profit for the level you want: gross profit = revenue − COGS; operating profit = gross − operating expenses; net profit = operating − interest − tax. Then divide that profit by revenue. For $20 gross profit on $50 revenue, the gross margin is 20 ÷ 50 = 40%.
Margin divides profit by the selling price; markup divides the same profit by the cost. Because the price is always larger than the cost, the margin percentage is always smaller than the markup. A 40% margin is a 66.7% markup, and a 50% margin is a 100% markup. Never confuse them: applying a 40% markup when you wanted a 40% margin quietly under-prices every sale.
Divide the cost by (1 − margin ÷ 100). To earn a 40% margin on a $30 cost, price = 30 ÷ (1 − 0.40) = 30 ÷ 0.60 = $50. Do not simply add 40% to the cost — that is a markup and would land you at $42, well short of the margin you wanted. A margin can never reach 100%, because that would require an infinite price.
It depends heavily on industry. Grocery and retail run on thin net margins (2–5%), while software and services can exceed 20–30%. Gross margins of 50–70% are common for products with low direct costs. Compare against peers in your sector rather than a universal benchmark, and watch the trend of your own margins over time.
Yes — it is completely free with no sign-up, and every calculation runs entirely in your browser. Nothing you enter is sent to a server or stored.
Method, assumptions & references
Methodology: gross margin = (revenue − COGS) ÷ revenue; operating margin = (gross − OpEx) ÷ revenue; net margin = (operating − interest − tax) ÷ revenue. Price from a target margin = cost ÷ (1 − margin/100); margin → markup = margin ÷ (100 − margin). All calculations run client-side; nothing is stored.
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How we calculate this
Reviewed by Reckonist Editorial · Last reviewed 4 July 2026. Figures follow the methods and sources set out in our editorial standards.
Profit-margin formulas are standard accounting identities. Figures are for guidance only and depend on how you classify costs; they are not a substitute for professional accounting advice.
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