Profit Margin Calculator

{{ targetBadge }} {{ displayMoney(calculation.grossProfit) }} gross profit {{ displayPercent(calculation.markupPct) }} markup {{ displayMoney(calculation.netProfit) }} net view {{ warnings.length }} margin note(s)

Revenue:

Enter the sales amount before subtracting cost of goods sold.

Cost of goods sold:

Use the same unit or period as revenue so the margin percentage is meaningful.

Target gross margin:

Use a category benchmark or internal floor; it does not change the base calculation.

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Currency symbol:

Choose the symbol shown in the summary, tables, chart, and JSON export.

Operating expenses:

Keep 0 when you only need gross profit, margin, and markup.

Revenue fee rate:

Default 0 keeps the base gross margin unchanged.

Metric	Value	Interpretation	Copy
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Priority	Signal	Evidence	Planning action	Copy
{{ row.priority }}	{{ row.signal }}	{{ row.evidence }}	{{ row.action }}

Scenario	Revenue	COGS	Gross profit	Gross margin	Target gap	Copy
{{ row.scenario }}	{{ row.revenue }}	{{ row.cogs }}	{{ row.grossProfit }}	{{ row.grossMargin }}	{{ row.targetGap }}

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Profit margin shows how much of revenue remains after a chosen set of costs. It is one of the fastest checks for pricing, product mix, job quotes, marketplace fees, and whether a sale leaves enough room for overhead.

Revenue divided into cost of goods sold, gross profit, overhead, and net profit

Gross margin uses revenue and cost of goods sold. A broader net view can also include operating expenses and revenue-based fees. The percentage depends on the denominator, so margin and markup can both be true while showing different percentages for the same sale.

Margin is not cash flow and it is not a full financial statement. Timing, taxes, inventory purchases, financing costs, and unpaid invoices can change the cash picture even when the margin number looks healthy.

Technical Details:

Gross profit is revenue minus cost of goods sold (COGS). Gross margin divides gross profit by revenue, so it answers how much of each sales dollar remains before optional overhead. Markup divides the same gross profit by COGS, which is why markup is usually larger than margin.

Gross margin = \frac{Revenue - COGS}{Revenue}

The net view subtracts operating expenses and an optional revenue fee after COGS. The target margin floor does not change the base calculation. It sets comparison rows such as Revenue for target margin, Target margin headroom, and the Margin Signals pass or review badge.

Profit margin formulas and outputs
Output	Formula or meaning
Gross profit	Revenue minus COGS.
Gross margin	Gross profit divided by revenue.
Markup on cost	Gross profit divided by COGS.
COGS share	COGS divided by revenue.
Net profit view	Revenue minus COGS, operating expenses, and revenue fee.
Net break-even headroom	Revenue above or below the break-even point after optional overhead and revenue fee.

The calculator clamps percentage controls such as target margin and revenue fee to practical bounds and treats negative revenue, COGS, and overhead inputs as zero. A zero revenue denominator leaves margin, markup, and target headroom undefined until revenue is entered.

Everyday Use & Decision Guide:

Use the same scope for Revenue and Cost of goods sold. A single item price should be paired with the cost for one item. A monthly sales figure should be paired with the direct costs for that same month.

Set Target gross margin to the category floor or internal pricing rule you want to test.
Leave Operating expenses at zero for a pure gross margin check, or enter overhead for a quick net-profit view.
Use Revenue fee rate for marketplace, processor, commission, or platform fees charged as a percentage of revenue.
Read Markup on cost only for cost-plus pricing language; use Gross margin for the revenue share left after COGS.

Margin Signals is the fastest review tab when a result needs judgment. It flags missing revenue, gross loss before overhead, margin below the selected floor, high COGS share, negative net view, and the margin-versus-markup difference.

Use Target Margin Table before changing a price. It compares the current result with break-even, target floor, a stretch floor, a 10% revenue stress, and a 10% cost stress, which makes small pricing and supplier changes easier to explain.

Step-by-Step Guide:

Enter Revenue for the sale, job, product, or period being measured. If revenue is zero, the summary asks for revenue before percentages are defined.
Enter Cost of goods sold for the same scope as revenue. This creates Gross profit, Gross margin, Markup on cost, and COGS share.
Set Target gross margin. The summary will report whether the margin is above or below that floor and show revenue headroom or revenue needed.
Open Advanced if needed, then set Currency symbol, Operating expenses, and Revenue fee rate for the net view.
Review Profit Snapshot, Margin Signals, and Margin Bridge. Copy or export only after the target and net-view rows match the decision you are making.

Interpreting Results:

Gross margin is the headline percentage for profitability against revenue. A positive gross margin does not prove the sale is profitable after overhead, so check Net profit view when operating expenses or revenue fees matter.

A high markup can still produce a moderate margin because the denominator is cost, not revenue. The Markup on cost row is useful for cost-plus pricing, while Target margin headroom is better for deciding whether the revenue clears a margin floor.

If COGS exceed revenue, the summary shows Gross Loss. Fix the revenue or cost assumptions before using the target table, because adding overhead to a gross-loss sale only makes the net view worse.

Worked Examples:

With Revenue at $10,000, Cost of goods sold at $6,200, and a Target gross margin of 40%, Gross profit is $3,800 and Gross margin is 38%. The Target margin headroom is negative because current revenue is about $333.33 short of the 40% floor at the same COGS.

Adding $1,000 of Operating expenses and a 3.5% Revenue fee rate changes the net view. The revenue fee is $350, so Net profit view becomes $2,450 and Net margin view becomes 24.5%.

A troubleshooting case appears when revenue is entered as zero. The summary shows Enter Revenue, and Margin Signals marks revenue as a fix because percentages need a positive revenue denominator.

FAQ:

Is margin the same as markup?

No. Gross margin divides gross profit by revenue. Markup on cost divides gross profit by COGS, so the percentages use different denominators.

What should count as COGS?

Use direct costs tied to the sale, such as product cost, materials, production labor, fulfillment, or service delivery. Put broader overhead in Operating expenses only when you want the net view.

Why is target revenue higher than my current revenue?

Revenue for target margin solves the revenue needed to hit the selected floor at the current COGS. If current revenue is lower, the summary reports a revenue gap.

Is this financial advice?

No. The output is a pricing and planning calculation. Confirm accounting treatment, taxes, inventory timing, and cash-flow effects before making high-stakes business decisions.

Glossary:

Revenue: Sales amount used as the denominator for margin.
COGS: Cost of goods sold, meaning the direct cost deducted before gross profit.
Gross margin: Gross profit as a percentage of revenue.
Markup on cost: Gross profit as a percentage of COGS.
Target margin headroom: The revenue amount above or below the selected gross margin floor.

References:

Glossary of Business Financial Terms, U.S. Small Business Administration.
Break-even point, U.S. Small Business Administration.
Manage your finances, U.S. Small Business Administration, updated March 7, 2025.