Profit Margin Calculator (Gross, Operating, Net)
Calculate gross margin, operating margin, and net margin from revenue and costs at each level of the income statement. Educational. Runs in your browser.
Each margin is a profit level divided by revenue. Gross margin (revenue − COGS) shows production efficiency; operating margin further removes operating expenses to show core-business profitability; net margin removes everything left — interest, taxes, and one-offs — for the bottom-line percentage of revenue kept as profit. Margins are most meaningful compared across time or against industry peers. Educational; everything runs in your browser.
About this tool
The three profit margins read straight down a company's income statement, each one peeling away another layer of cost to show how much of every revenue dollar survives. Gross margin is gross profit (revenue minus cost of goods sold) divided by revenue — it measures how efficiently a company turns direct production costs into sales and is heavily shaped by industry: software runs 70–90% while grocery retail runs in the single to low double digits. Operating margin goes further, subtracting operating expenses such as selling, general and administrative costs (SG&A) and research and development, so it captures profitability from the core business before financing and tax effects; it is a clean way to compare operational efficiency across companies with different capital structures. Net margin is the bottom line: operating profit minus interest, taxes, and any other items, divided by revenue — the share of every dollar of sales that ends up as profit for owners. Reading all three together is more informative than any one alone: a healthy gross margin with a thin net margin points to heavy overhead or interest burden, while shrinking gross margin signals pricing or input-cost pressure. Margins matter most in context — tracked over time and benchmarked against direct competitors. This is educational. Everything runs in your browser; nothing is uploaded.
How to use it
- Enter total revenue for the period.
- Enter cost of goods sold (direct costs of producing the product or service).
- Enter operating expenses — SG&A, R&D, and other overhead.
- Enter interest, taxes, and any other below-the-line items.
- Read gross, operating, and net margins as a percentage of revenue.
Frequently asked questions
- What is the difference between gross, operating, and net margin?
- Gross margin = (revenue − COGS) ÷ revenue. Operating margin further subtracts operating expenses (SG&A, R&D). Net margin subtracts everything remaining — interest, taxes, and other items. Each is divided by revenue and shown as a percentage.
- How do I calculate gross margin?
- Gross margin = (Revenue − Cost of Goods Sold) ÷ Revenue × 100. For $1,000,000 revenue and $600,000 COGS, gross profit is $400,000 and gross margin is 40%.
- What is a good profit margin?
- It depends entirely on the industry. Software and pharma carry high gross and net margins; grocery, airlines, and construction run thin. Compare a company to its direct peers and to its own history rather than to an absolute target.
- Is margin the same as markup?
- No. Margin is profit as a percentage of revenue (price); markup is profit as a percentage of cost. A 50% markup on a $100 cost gives a $150 price and a 33.3% margin. This tool computes margins on revenue.
- Why is my net margin negative?
- Total costs exceeded revenue for the period — the company posted a loss. A negative gross margin means it cannot even cover direct production costs; a negative net margin with positive gross margin points to high overhead, interest, or one-time charges.
- Is anything uploaded?
- No. All calculations run entirely in your browser.