Profit margin calculator
Work out how much of your revenue you actually keep — after the cost of what you sell and the overhead it takes to run the business.
Enter your revenue, cost of goods or cost of sales, and operating expenses. The calculator shows your gross margin, net margin, and the minimum revenue needed to break even at your current cost structure.
Profit margin calculator inputs and results
How this calculator works
Gross profit is revenue minus cost of goods — the money left over before paying for the overhead that keeps the business running. Gross margin expresses that as a percentage of revenue. It's the most useful number for comparing across periods or against competitors, because it strips out the fixed cost structure and shows whether your core offering is priced right relative to what it costs to deliver.
Net profit subtracts operating expenses from gross profit. Net margin is net profit as a share of revenue. Break-even revenue is operating expenses divided by gross margin — the minimum revenue needed so that gross profit exactly covers overhead, leaving nothing left over and nothing lost.
About this tool
This calculator works out gross and net profit margins for any business. Inputs: revenue, cost of goods sold or cost of sales, and operating expenses (rent, staff, software, and other fixed costs). Outputs: gross profit, gross margin %, net profit, net margin %, and the break-even revenue needed to cover all costs at the current cost structure.
Frequently asked questions
What's the difference between gross margin and net margin?
Gross margin is what's left after subtracting the direct cost of producing or delivering what you sell — cost of goods for a product business, cost of delivery for a service business. Net margin subtracts operating expenses on top of that: rent, payroll, software, and other overhead. Gross margin tells you whether your core offering is viable. Net margin tells you whether the business is.
What counts as cost of goods sold?
Any cost that scales directly with each unit you sell or service you deliver. For product businesses that's materials, manufacturing, and inbound shipping. For service businesses it's contractor time, hosting directly tied to delivering the service, or any variable cost that goes up when you take on more work. Fixed costs like your own salary, office rent, and tools go in operating expenses instead.
What counts as operating expenses?
Fixed and semi-fixed costs that continue regardless of sales volume — rent, salaries, software subscriptions, marketing spend, insurance, and similar overhead. If a cost doesn't change when you sell one more unit, it belongs here rather than in cost of goods.
How is break-even revenue calculated?
Break-even revenue is operating expenses divided by gross margin. It's the minimum revenue needed to cover fixed costs given your current gross margin. If your gross margin is 50% and your operating expenses are $10,000 per month, you need $20,000 in revenue to break even. Below that you're making a loss; above it, each extra dollar of revenue contributes 50 cents of net profit.