Profit Margin Calculator

Gross profit margin = (Revenue − COGS) / Revenue × 100. It measures how efficiently a company produces goods/services before overhead costs are factored in. A healthy gross margin varies by industry: software companies often exceed 70%, while retailers may target 25–40%.

Net profit margin = Net Income / Revenue × 100. It's the bottom line — how much of each dollar of revenue becomes profit after all expenses including taxes and interest. Average net margins range from 5–20% for most businesses.

You can improve margins by increasing prices, reducing cost of goods sold (better supplier negotiations, operational efficiency), cutting operating expenses, or increasing sales volume to spread fixed costs over more units.