Profit Margin Calculator
Gross margin = (Revenue − COGS) ÷ Revenue × 100. Net margin = (Revenue − COGS − Operating Costs) ÷ Revenue × 100. Margin measures profit as a percentage of selling price.
Calculate margin from revenue & cost
Enter revenue and costs to see your profit margins.
Find required revenue for a target margin
What revenue do you need to hit a specific gross margin?
Related: Markup Calculator · Margin vs Markup · Break-Even
How the Profit Margin Calculator works
This calculator helps you determine gross and net profit margins from your revenue and cost figures. Enter your total revenue and cost of goods sold (COGS) to see your gross profit in pounds and as a percentage. Optionally add operating costs — such as salaries, rent, and marketing — to calculate your net profit margin as well.
Gross margin reflects how efficiently a business produces or sources its products. Net margin tells you how much of each pound of revenue actually ends up as profit after all expenses. Both are widely used by business owners, accountants, and investors to benchmark performance and assess financial health.
Use the target revenue tool to work backwards: enter your COGS and the gross margin percentage you want to achieve, and the calculator will tell you the revenue you need to generate. This is useful for pricing strategy and financial planning.
Frequently asked questions
What is a good profit margin?
A good profit margin varies significantly by industry. In the UK, retail businesses typically operate on gross margins of 20–50%, while software companies may achieve 60–80%. Net profit margins are always lower once operating costs are included. A net margin of 10% is often cited as a healthy benchmark for many industries, but context matters — some sectors such as grocery retail operate on margins below 5%.
What is the difference between gross and net profit margin?
Gross profit margin measures profit after deducting the direct cost of goods sold (COGS), expressed as a percentage of revenue. Net profit margin goes further, deducting operating costs such as salaries, rent, and marketing as well. Gross margin reflects production efficiency; net margin reflects the overall profitability of the business after all operating expenses.
How do I improve profit margin?
Profit margins can be improved by increasing selling prices (if the market allows), reducing the cost of goods sold through better supplier negotiations or process efficiency, cutting operating costs, or shifting the sales mix towards higher-margin products or services. Increasing volume can also improve margins where there are fixed cost efficiencies to be gained.
What is the difference between margin and markup?
Margin and markup both describe the relationship between cost and selling price, but they are calculated differently. Margin is profit expressed as a percentage of the selling price (Revenue minus Cost, divided by Revenue). Markup is profit expressed as a percentage of the cost price (Revenue minus Cost, divided by Cost). A 50% markup results in a 33% margin — so the two figures are never the same.