What is profit margin?

Profit margin is the percentage of revenue that remains as profit after expenses. Gross margin = (Revenue - COGS) / Revenue × 100. Net margin = Net Profit / Revenue × 100.

What is the difference between margin and markup?

Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A 50% markup becomes a 33.3% margin. They measure the same profit but from different baselines.

💰 Business & Productivity

Profit Margin Calculator

Q: What is a good profit margin?

Profit margins vary widely by industry. Retail: 2-5% net. Software/SaaS: 70-80% gross. Restaurants: 3-5% net. Service businesses: 15-25% net. A net margin above 20% is considered excellent in most industries.

Calculate gross profit margin, net profit margin, markup percentage, and selling price from cost. Compare against industry benchmarks. Instant results for any product or business.

Calculate Profit Margin

Revenue / Selling Price ($)

Cost of Goods Sold ($)

Operating Expenses ($)

GROSS PROFIT

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GROSS MARGIN

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NET PROFIT

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NET MARGIN

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MARKUP

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COST RATIO

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Your gross margin vs industry benchmarks:

Grocery retail (~2%)

Restaurant (~65%)

65%

E-commerce (~42%)

42%

SaaS (~75%)

75%

Your business

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Cost of Goods ($)

Target Margin (%)

SELLING PRICE

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GROSS PROFIT

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MARKUP %

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Markup Percentage (%)

Cost ($)

MARGIN

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SELLING PRICE

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PROFIT

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Margin vs Markup: The Critical Difference

Confusing margin and markup is one of the most common — and costly — mistakes in business pricing. They measure the same profit but from different reference points:

Gross Margin = (Revenue − COGS) / Revenue × 100 Markup = (Revenue − COGS) / COGS × 100 Example: Cost $60, Sell $100 Margin = (100 − 60) / 100 × 100 = 40% Markup = (100 − 60) / 60 × 100 = 66.7%

A business owner who targets a "50% markup" actually achieves a 33.3% gross margin. If they think they're making 50 cents on every dollar but actually make 33 cents, their pricing model is broken. Use our "Markup → Margin" tab to instantly convert between the two.

Industry gross margin benchmarks

Grocery/Supermarket: 1–3% net (very high volume, razor-thin margins)
E-commerce retail: 40–45% gross, 5–10% net
Restaurants: 60–70% gross (food cost), 3–6% net after labor
Software/SaaS: 70–85% gross margin (near-zero marginal cost)
Service businesses: 50–70% gross, 15–25% net
Manufacturing: 25–35% gross

Frequently Asked Questions

What is a good profit margin for a small business?

For most small service businesses, a net profit margin of 10–20% is healthy. Product-based businesses typically run 5–15% net. Below 5% net means very little buffer for unexpected costs. Above 20% is excellent for most industries. Compare against your specific industry's benchmarks rather than a generic number.

How do I calculate the selling price for a desired margin?

Selling Price = Cost / (1 − Desired Margin). For a 40% margin on a $60 cost: $60 / (1 − 0.40) = $60 / 0.60 = $100. Use the "Find Selling Price" tab above to calculate this instantly for any cost and margin target.

What is the difference between gross and net profit margin?

Gross profit margin only subtracts the direct cost of producing goods (COGS — materials, direct labor). Net profit margin subtracts all expenses — COGS plus operating costs like rent, salaries, marketing, taxes, and interest. Net margin gives the true bottom-line profitability of the entire business.