Profit Margin Calculator
Calculate gross profit, net profit, markup percentages, and analyze business profitability. Make informed pricing decisions with comprehensive margin analysis.
Calculate Profit Margins
Enter your cost and revenue details to analyze profitability
Profit Analysis
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Key Profit Metrics
Profit Breakdown
Cost Structure
Profit Distribution
Pricing Recommendations
Profit Margin Insights
Industry Standards
Average gross margins vary by industry: Retail (25-35%), Software (80-90%), Restaurants (3-15%), Manufacturing (20-40%).
Margin vs Markup
Margin is profit as percentage of revenue, while markup is profit as percentage of cost. A 50% markup equals 33% margin.
Break-even Analysis
Calculate your break-even point to understand how many units you need to sell to cover fixed and variable costs.
Scaling Impact
As production scales, fixed costs spread over more units, potentially increasing profit margins through economies of scale.
Profit Margin FAQs
What's the difference between gross margin and net margin?
Gross margin is (Revenue - COGS) / Revenue, showing production efficiency. Net margin is (Revenue - All Expenses) / Revenue, showing overall profitability after all costs.
How do I convert markup to margin?
Margin = Markup / (1 + Markup). Example: 50% markup = 0.50 / (1 + 0.50) = 33% margin. Use our calculator for automatic conversions.
What is a good profit margin for my business?
Good margins vary by industry. Generally, 10-20% net margin is healthy for most businesses. Software often sees 20-30%, while retail might be 2-10%.
How can I improve my profit margins?
Increase prices strategically, reduce production costs, optimize operations, increase sales volume, or focus on higher-margin products/services.
When should I worry about low profit margins?
Be concerned if margins are consistently below industry averages, declining over time, or insufficient to cover business growth and unexpected expenses.