Profit Margin Calculator
Calculate gross, operating, and net profit margins.
Profit Margin Calculator
Gross Profit
$40,000
Gross Margin
40.0%
Operating Profit
$20,000
Operating Margin
20.0%
Understanding Profit Margins
Profit margin measures how much of every dollar in revenue a company keeps as profit. It's one of the most important metrics for evaluating business performance and comparing companies within an industry.
Types of Profit Margin
- Gross Margin: (Revenue - COGS) / Revenue. Shows efficiency of production/service delivery.
- Operating Margin: (Revenue - COGS - Operating Expenses) / Revenue. Shows operational efficiency.
- Net Margin: Bottom line after all expenses including taxes and interest.
Industry Benchmarks
Profit margins vary significantly by industry. Software companies often have 70%+ gross margins, while grocery stores may operate on 2-3% net margins. Compare your margins to industry averages for meaningful context.