Profit Margin Calculator
This calculator shows three types of profit margins: gross, operating, and net. Enter revenue, cost of goods sold, operating expenses, and taxes. The calculator displays each margin type and the absolute profit at each level, helping you analyze profitability from product through final net income.
Profit margin formulas
Gross Margin = ((Revenue - COGS) / Revenue) × 100%
Operating Margin = ((Revenue - COGS - OpEx) / Revenue) × 100%
Net Margin = ((Revenue - COGS - OpEx - Taxes) / Revenue) × 100%
How to use this calculator
- Enter your total revenue in "Revenue".
- Enter cost of goods sold (direct product costs) in "COGS".
- Enter operating expenses (salaries, rent, utilities) in "Operating expenses".
- Enter taxes and other deductions in "Taxes & other".
- The calculator shows all three margin percentages.
Understanding the three margins
Gross margin: Shows the percentage of revenue left after direct product costs. Higher means efficient production.
Operating margin: Shows the percentage of revenue left after all operating expenses. Indicates operational efficiency and overhead management.
Net margin: Shows the percentage of revenue as final profit. The bottom-line measure of overall business profitability.
Profit margin calculator: frequently asked questions
What are the three profit margins?
Gross margin = (revenue - COGS) / revenue. Operating margin = operating income / revenue. Net margin = net income / revenue. Each shows profit at a different stage.
Why three different margins?
Gross margin shows product profitability. Operating margin shows operational efficiency. Net margin shows overall business profitability after all expenses.
What is a good net profit margin?
It varies: retail 2-5%, services 10-20%, technology 15-25%, finance 15-30%. Check your industry benchmarks.
What reduces operating income?
Operating expenses: salaries, rent, utilities, marketing, depreciation. These are subtracted from gross profit to get operating income.
What reduces net income further?
Interest on debt, taxes, and other non-operating expenses. These are subtracted from operating income to get net income.
Official sources
- U.S. Securities and Exchange Commission: Financial Analysis Tools.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.