What is Profit Margin?
The Profit Margin Calculator computes gross margin, net margin, and markup percentage — the three essential profitability metrics every business owner needs to know.
Gross Margin = (Revenue − Cost of Goods) / Revenue × 100. It shows how much you keep from each sale after direct costs. A 40% gross margin means you keep ₹40 from every ₹100 in sales.
Net Margin = (Revenue − All Costs − Expenses) / Revenue × 100. It accounts for operating expenses (rent, salaries, marketing, etc.) and shows true bottom-line profitability.
Markup = (Revenue − Cost) / Cost × 100. It shows how much you've added to the cost price. A 66.7% markup on ₹600 cost = selling at ₹1,000.
Important: Margin ≠ Markup. A 40% margin = 66.7% markup. A 50% markup = 33.3% margin. Confusing the two is one of the most common business pricing mistakes.
Typical margins by industry: Software/SaaS 70-90%, E-commerce 20-40%, Restaurants 3-9%, Retail 25-50%, Manufacturing 10-25%.
Formula
Gross Profit = Revenue − COGS Gross Margin = (Gross Profit / Revenue) × 100 Net Profit = Revenue − COGS − Operating Expenses Net Margin = (Net Profit / Revenue) × 100 Markup = (Gross Profit / COGS) × 100 Example — Revenue ₹1,000, Cost ₹600, Expenses ₹200: Gross Profit = ₹400, Gross Margin = 40% Net Profit = ₹200, Net Margin = 20% Markup = 400/600 × 100 = 66.7% Margin vs Markup conversion: 20% margin = 25% markup 33% margin = 50% markup 40% margin = 67% markup 50% margin = 100% markup
How to use this Profit Margin Calculator?
1. Enter revenue (selling price or total sales). 2. Enter cost (COGS — cost of goods sold, direct costs). 3. Enter operating expenses (rent, salaries, marketing, etc.). 4. See gross profit, gross margin, net profit, net margin, and markup.