Gross vs net profit margin calculator

Gross margin tells you what each sale leaves after the cost of the goods. Net margin tells you what is left after everything else too. Enter one period's numbers and see both, plus operating margin and markup. Nothing is saved or sent anywhere.

Revenue ($) Cost of goods sold ($) Operating expenses ($) Other costs: interest, one-offs ($)

Operating expenses = rent, wages, marketing, software and other running costs. If you want an after-tax net margin, add the income tax you actually paid to other costs; this page does not estimate tax. The prefilled numbers are a made-up worked example, not typical figures: replace them with your own.

How it works

Gross profit = revenue − cost of goods sold. Gross margin = gross profit ÷ revenue. Operating profit = gross profit − operating expenses. Net profit = operating profit − other costs. Net margin = net profit ÷ revenue. Markup = gross profit ÷ cost of goods sold.

Worked example (the values above): $80,000.00 revenue less $32,000.00 cost of goods is $48,000.00 gross profit, a 60.0% gross margin. Take off $28,000.00 of operating expenses and the operating profit is $20,000.00 (25.0%). Take off $2,000.00 of other costs and the net profit is $18,000.00, a 22.5% net margin. The markup on cost of goods is $48,000.00 ÷ $32,000.00 = 150.0%.

The 37.5-point gap between the 60.0% gross margin and the 22.5% net margin is what your overheads and other costs take. A healthy gross margin with a thin net margin points at overheads; a thin gross margin points at prices or the cost of goods. See also the profit and loss calculator, the price increase calculator and all calculators.