Profit Margin Calculator

Profit margin is the percentage of revenue that remains as profit after subtracting costs. Gross profit margin only subtracts the cost of goods sold (COGS), while net profit margin also deducts operating expenses like rent, salaries, and marketing. A 40% gross margin means you keep $0.40 of every $1 in revenue after direct costs.

Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. If you buy for $60 and sell for $100: margin is 40% ($40/$100), markup is 66.7% ($40/$60). They describe the same profit from different reference points. Margin is always lower than markup for the same transaction.

It varies by industry. Service businesses (consulting, freelancing) typically have 50–80% gross margins because labour is the main cost. Product businesses usually have 30–50% gross margins. For net margins: 5–10% is average across industries, 10–20% is good, and above 20% is excellent. Compare against your specific industry benchmarks.

Three levers: raise prices (test small increases — even 5% goes straight to profit), reduce cost of goods sold (negotiate supplier terms, find alternatives, reduce waste), or cut operating expenses (eliminate unused subscriptions, automate manual tasks). The fastest win for freelancers is usually raising rates — most are undercharging by 20–40%.

The break-even point is the number of units you need to sell to cover all fixed costs. Below break-even you're losing money; above it, every additional sale is profit. Formula: Fixed Costs ÷ (Price per Unit − Cost per Unit). Use our detailed mode to calculate your break-even point.

Both. Gross margin tells you if your pricing covers direct costs — if it's shrinking, your costs are rising faster than your prices. Net margin tells you if the business is profitable after all expenses. A healthy gross margin with a poor net margin usually means operating expenses (overhead) are too high.