Profit Margin Calculator
Calculate gross margin, operating margin, net profit margin, EBITDA margin, and markup from any revenue and cost inputs. Switch to markup mode to set a selling price from cost.
e.g. $500,000
Direct cost of producing goods/services
Rent, salaries, marketing, etc.
Loan interest payments
U.S. corporate rate: 21%
Non-cash asset depreciation charge
Non-cash intangible amortization charge
Gross Margin
60.0%
$300,000
Operating Margin
30.0%
$150,000
EBITDA Margin
34.0%
$170,000
Net Margin
22.1%
$110,600
P&L Waterfall
Markup on COGS: 150.0%(gross profit as % of cost of goods sold)
P&L Summary
| Line Item | Amount | % of Revenue |
|---|---|---|
| Revenue | $500,000 | 100.0% |
| COGS | ($200,000) | 40.0% |
| Gross Profit | $300,000 | 60.0% |
| Operating Expenses | ($150,000) | 30.0% |
| Operating Profit | $150,000 | 30.0% |
| EBITDA | $170,000 | 34.0% |
| Interest | ($10,000) | 2.0% |
| Taxes | ($29,400) | 5.9% |
| Net Profit | $110,600 | 22.1% |
How to Use This Profit Margin Calculator
Calculate all four margin types in seconds. Follow these steps:
- Choose your mode — select Margin Calculator to analyze an existing P&L, or Markup Calculator to determine a selling price from cost.
- Enter revenue and costs — for margin mode, enter total revenue, cost of goods sold, and operating expenses.
- Add optional details — include interest, taxes, depreciation, and amortization for EBITDA and net margin.
- Read your margins — all four margin types are calculated instantly with a visual P&L waterfall.
Results update in real time as you type. Use the Share button to save a link to your exact inputs, or Print to export as PDF.
Formulas & Benchmarks
Gross Margin
Gross Margin = (Revenue − COGS) / Revenue × 100Measures profit after direct production costs. Strong gross margins (>50%) indicate pricing power.
Operating Margin
Operating Margin = Operating Profit / Revenue × 100Operating Profit = Gross Profit − Operating Expenses. Shows core business profitability before financing.
EBITDA Margin
EBITDA Margin = EBITDA / Revenue × 100EBITDA = Operating Profit + Depreciation + Amortization. Strips out non-cash charges for cross-company comparison.
Net Margin
Net Margin = Net Profit / Revenue × 100Net Profit = Operating Profit − Interest − Taxes. The bottom line — actual profit kept after all obligations.
Markup Formula
Selling Price = Cost × (1 + Markup% / 100)Example: $100 cost with 50% markup → $150 selling price, $50 profit, 33.3% margin.
Margin vs. Markup Comparison
| Markup on Cost | Equivalent Margin |
|---|---|
| 25% | 20.0% |
| 50% | 33.3% |
| 100% | 50.0% |
| 200% | 66.7% |
Formula: Margin = Markup / (1 + Markup). Always lower than the equivalent markup percentage.
Industry Benchmark Reference
| Industry | Gross Margin | Net Margin |
|---|---|---|
| Software / SaaS | 70–85% | 20–30%+ |
| Healthcare | 40–60% | 10–15% |
| Manufacturing | 25–40% | 5–10% |
| Retail | 20–40% | 2–5% |
| Restaurants | 60–70% | 3–9% |
| S&P 500 Average | ~50% | 12–13% |
Frequently Asked Questions
Profit margin is the percentage of revenue that remains as profit after deducting costs. There are several types: gross margin (after cost of goods sold), operating margin (after operating expenses), and net margin (after all expenses including taxes and interest). Higher margins mean more profit is kept per dollar of revenue.
It varies significantly by industry. Software/SaaS: net margins 20–30%+ | Retail: 2–5% | Restaurants: 3–9% | Healthcare: 10–15% | Manufacturing: 5–10%. Comparing your margins to industry benchmarks is more meaningful than using a universal threshold. Gross margins above 50% are considered strong for most product businesses.
Margin is profit as a percentage of revenue: (Price − Cost) / Price × 100. Markup is profit as a percentage of cost: (Price − Cost) / Cost × 100. A 50% markup equals a 33.3% margin. A 100% markup equals a 50% margin. Margin is used for financial reporting; markup is used for pricing decisions.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin measures operational profitability before non-cash charges and financing decisions. It is widely used for comparing companies across industries and capital structures. EBITDA Margin = EBITDA / Revenue × 100. A healthy EBITDA margin is typically 15–25% for established businesses.
Key strategies: (1) Increase revenue through pricing power or volume; (2) Reduce COGS by negotiating with suppliers or improving production efficiency; (3) Cut operating expenses by automating processes or reducing overhead; (4) Focus on higher-margin products or services. Even a 1–2 percentage point improvement in net margin can dramatically increase total profit on large revenue bases.
Gross profit = Revenue − Cost of Goods Sold (COGS). It measures the profit from selling products before overhead. Net profit = Revenue − all expenses (COGS + operating expenses + interest + taxes). Net profit is the "bottom line" — what the business actually keeps. A business can have strong gross margins but poor net margins if overhead is too high.
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