What is a good profit margin?

It is entirely sector-dependent. Supermarkets operate on low single digits, professional services often exceed 30%, and software can be higher still. Compare against your own sector.

What is the difference between gross and net margin?

Gross margin subtracts only direct costs. Net margin subtracts everything, including overheads, interest and tax, and is always the smaller figure.

Can margin exceed 100%?

No. Profit can never exceed revenue, so margin caps at 100%. Markup, measured against cost, has no upper limit.

Profit Margin Calculator

Profit margin measures profit as a share of revenue. It is the standard measure of profitability because it is comparable between businesses of any size.

Fill in the fields above and select Calculate to see your result and the full working.

Please note: Financial calculators produce estimates using the figures you enter. They exclude fees, taxes, insurance and rate changes unless a field asks for them. They are not financial advice — confirm any significant decision with a qualified adviser or your lender.

Formula used

Margin = (revenue − cost) ÷ revenue × 100

How to use this calculator

Enter revenue for the period, or the selling price of a single unit.
Enter the direct cost of producing or buying what you sold.
Use the same basis for both — per unit or per period, never mixed.

Example calculation

Selling for $64 with $40 of cost:

Gross profit = $24

Margin = 24 ÷ 64 = 37.5%

The same figures are a 60% markup on cost.

What does this result mean?

This is gross margin, covering direct costs only. Operating margin also subtracts overheads such as rent and salaries, and net margin subtracts interest and tax as well. Gross margin is the number that tells you whether each sale is fundamentally viable; if it is thin, no amount of volume will fix the business.

Frequently asked questions

What is a good profit margin?: It is entirely sector-dependent. Supermarkets operate on low single digits, professional services often exceed 30%, and software can be higher still. Compare against your own sector.
What is the difference between gross and net margin?: Gross margin subtracts only direct costs. Net margin subtracts everything, including overheads, interest and tax, and is always the smaller figure.
Can margin exceed 100%?: No. Profit can never exceed revenue, so margin caps at 100%. Markup, measured against cost, has no upper limit.

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