BusCalcTools

Profit Margin Calculator — Instant, Free Results

Calculate gross, operating, and net profit margin from your revenue and cost figures. Switches automatically between USA, UK, and South Africa tax rates.

Tax rate pre-filled at 21% for United States.

Inputs

$

Total income before any deductions

$

Direct costs to produce the product/service

$

Rent, salaries, marketing — enables operating margin

%

Pre-filled for United States. Edit if needed.

Gross Profit Margin

Healthy

40.0%

Strong gross margin. Pricing and unit economics look healthy.

Gross profit: $20,000.00

Net Profit Margin (after tax)

Caution

31.6%

Healthy net margin — bottom line is sustainable.

Net profit: $15,800.00

How it works

Enter your total revenue and your cost of goods sold (COGS) — the direct costs to produce or buy what you sell. Gross profit is what remains. Add your operating expenses (rent, salaries, marketing) to see operating margin. Add your tax rate to see true net profit margin after tax. Results update on every keystroke; there is no submit button.

Tax rates pre-fill from your selected region: 21% for the USA (federal corporate), 25% for the UK (corporation tax, 19% small profits rate applies under £50,000), and 27% for South Africa (standard corporate). Override the rate if your business has a different effective rate.

See the formula
Gross Profit Margin (%) = ((Revenue − COGS) / Revenue) × 100

Net Profit Margin (%) = ((Revenue − COGS − Operating Expenses − Tax) / Revenue) × 100

Example: Revenue = $50,000 | COGS = $30,000
  Gross Profit = $20,000
  Gross Profit Margin = (20,000 / 50,000) × 100 = 40%

Frequently Asked Questions

What is a good profit margin for a small business?
A gross profit margin above 40% is considered strong for most product businesses. Service businesses typically see higher margins (50–70%). Net profit margins of 10–20% are healthy for most small businesses. Use this calculator to benchmark your margin against these targets.
What is the difference between profit margin and markup?
Profit margin is calculated as a percentage of your selling price. Markup is calculated as a percentage of your cost. A 50% markup on a $10 cost gives a $15 selling price — but the margin on that sale is only 33%. They are different numbers for the same transaction.
How do I calculate gross profit margin?
Gross profit margin = ((Revenue − Cost of Goods Sold) / Revenue) × 100. For example, if you earn $100,000 in revenue and your COGS is $60,000, your gross profit is $40,000 and your gross margin is 40%.
What is net profit margin?
Net profit margin is your profit as a percentage of revenue after ALL costs — including COGS, operating expenses, interest, and taxes. It is the true bottom-line profitability measure. A 10% net margin means you keep $10 for every $100 of revenue earned.
How is profit margin different in the UK vs USA?
The calculation method is identical, but tax rates differ. In the UK, corporation tax is 25% (19% for profits under £50,000). In the USA, federal corporate tax is 21%, with additional state-level taxes. This calculator automatically adjusts for your selected region.

Glossary

COGS (Cost of Goods Sold)
The direct cost of producing or buying the goods you sold during a period — raw materials, manufacturing labour, freight in.
Operating Expenses (OpEx)
Ongoing costs to run the business that are not tied to a specific unit sold — rent, salaries, software, marketing.
Net Profit
The bottom-line profit after all costs and taxes have been subtracted from revenue.

Related calculators

Markup Calculator

Convert cost price to selling price at any markup %.

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Pricing Calculator

Set the optimal selling price from cost and margin.

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Net Profit Calculator

Calculate true net profit after all costs and tax.

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For information only. This calculator does not constitute financial, accounting, or tax advice. Consult a qualified professional before making business decisions.