Profit Margin Calculator
Calculate gross, operating and net profit margins to measure your business profitability.
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Frequently Asked Questions
What is a good profit margin?
Benchmarks vary by industry. Gross margin: software 70-80%, retail 25-50%, restaurants 60-70% (food only). Net margin: tech companies 20-30%, retail 2-5%, restaurants 3-6%, healthcare 5-10%. A net margin above 10% is generally considered strong across most industries.
What is the difference between gross, operating and net margin?
Gross margin = (Revenue − COGS) ÷ Revenue. It measures production efficiency. Operating margin deducts operating expenses (salaries, rent, marketing) — it shows core business profitability. Net margin is the bottom line after everything including taxes and interest. Track all three to diagnose where profits are being lost.
How do I improve my profit margin?
Increase gross margin: raise prices, reduce COGS through better supplier negotiations or product mix. Improve operating margin: cut overhead, automate processes, reduce headcount costs. Increase net margin: minimise debt interest, optimise tax strategy. Often a combination of small wins across all three lines is more sustainable than one large cut.