Profit Margin Calculator 2026 — Gross, Net & Operating Margin

Q: What is gross profit margin?

Gross profit margin is the percentage of revenue left after subtracting the cost of goods sold (COGS). Formula: (Revenue − COGS) ÷ Revenue × 100. A 60% gross margin means you keep $0.60 of every dollar before operating expenses.

Q: What is a good profit margin for a small business?

Gross margins vary widely by industry. Service businesses typically run 50–70% gross margins. Retail averages 20–35%. Restaurants are notoriously thin at 3–9% net. A net profit margin above 10% is considered healthy for most small businesses.

Q: What is the difference between gross and net profit margin?

Gross margin subtracts only the direct cost of producing your product or service (COGS) from revenue. Net margin subtracts all expenses — COGS plus operating costs like rent, salaries, marketing, and taxes. Net margin is the true bottom-line profitability.

Q: How do I increase my profit margin?

Three levers: (1) Raise prices — even a 5% price increase has an outsized effect on margin if volume holds. (2) Reduce COGS — negotiate supplier terms, reduce waste, improve efficiency. (3) Cut operating expenses — audit fixed costs like software, subscriptions, and office space.

Your Numbers

Revenue

Total revenue (monthly, quarterly, or annual — be consistent)

Costs

Cost of goods sold (COGS) (materials, direct labor, production costs)

Operating expenses optional — rent, salaries, marketing, insurance, software

Results

Enter your revenue and cost of goods sold to calculate your profit margins.

Your Profit Margins

Gross profit margin
Revenue kept after direct production costs
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Gross profit

Revenue minus COGS

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Net profit

What you actually take home

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Markup on COGS

How much you charge above cost

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Gross margin 0%

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Industry benchmarks

Software/SaaS: 70–85% gross margin
Professional services (consulting, legal, accounting): 50–70%
HVAC / trades: 40–55% gross, 10–20% net
E-commerce / retail: 20–45% gross, 2–8% net
Restaurants: 28–35% gross, 3–9% net
Cleaning / home services: 50–65% gross

Common Questions

What is gross profit margin? +

Gross profit margin is the percentage of revenue remaining after subtracting the direct cost of producing your product or service (COGS). Formula: (Revenue − COGS) ÷ Revenue × 100. A 60% gross margin means you keep $0.60 of every dollar before overhead.

What is a good profit margin for a small business? +

It depends heavily on industry. Service businesses typically run 50–70% gross margins. Retail averages 20–35%. Restaurants are notoriously thin at 3–9% net. A net profit margin above 10% is considered healthy for most small businesses, and above 20% is strong.

What is the difference between gross and net profit margin? +

Gross margin only subtracts the direct cost of producing your product (COGS). Net margin subtracts everything — COGS plus all operating expenses like rent, salaries, marketing, and taxes. Net margin is your true bottom line.

How do I increase my profit margin? +

Three levers: (1) Raise prices — even a 5% increase has an outsized effect if volume holds. (2) Reduce COGS — negotiate with suppliers, reduce waste, improve production efficiency. (3) Cut operating expenses — audit fixed costs like software, subscriptions, and unnecessary overhead.

What is markup vs margin? +

Markup is how much you charge above cost, expressed as a percentage of cost. Margin is how much of the sale price is profit, expressed as a percentage of revenue. A 50% markup = 33% margin. A 100% markup = 50% margin. Confusing the two is a common pricing mistake.