Profit Margin Calculator — Calculate Gross & Net Margins

What is Profit Margin Calculator — Calculate Gross & Net Margins?

A margin calculator computes profit margins for businesses, showing gross profit margin (revenue minus cost of goods sold), net profit margin (revenue minus all expenses), and markup percentage needed to achieve target margins. Helps retailers set prices that cover costs and generate desired profits, wholesalers determine markup levels, and businesses analyze profitability. Calculates both margin (profit as percentage of selling price) and markup (profit as percentage of cost)—many business owners confuse these, leading to pricing errors. Essential for pricing strategy, financial analysis, evaluating product profitability, and ensuring sustainable business operations.

Key Benefits & Use Cases

Avoid pricing products below cost by understanding true profit margins after all expenses—many businesses fail by confusing markup with margin or forgetting hidden costs. Set optimal pricing that balances competitiveness with profitability—price too low and you work for nothing, price too high and lose customers. Calculate required sales volume to hit revenue and profit targets at different margin levels, helping with business planning and forecasting. Compare product or service profitability to focus on high-margin offerings and phase out low-margin ones. Quickly evaluate pricing changes—see how 5% price increase affects profit margins and whether volume decreases would offset gains. Used by retailers, wholesalers, consultants, service providers, and business owners to maintain healthy margins and sustainable profitability.

How to Use This Calculator

Enter cost of goods sold (what you paid to acquire or produce item) and selling price (what customer pays) to calculate gross margin percentage. For net margin, also enter operating expenses (rent, salaries, utilities, marketing). Results show both margin (profit/price) and markup (profit/cost)—these differ significantly, e.g., 50% margin equals 100% markup. For pricing strategy, enter your cost and desired margin percentage to find required selling price. Remember that 40% gross margin is typical for retail, 15-20% for wholesale, 50-70% for services. Monitor margins regularly as costs change—suppliers raise prices but you may delay passing costs to customers, eroding margins. Use break-even analysis to see minimum sales volume needed at various margin levels.