Profit Margin Calculator

Worked example

Revenue: $50,000. COGS: $32,000. Operating expenses: $9,000.

• Gross profit = $50,000 − $32,000 = $18,000
• Gross profit margin = $18,000 / $50,000 × 100 = 36%
• Net profit = $50,000 − $32,000 − $9,000 = $9,000
• Net profit margin = $9,000 / $50,000 × 100 = 18%

The gap between the two margins — 36% gross versus 18% net — is entirely the operating expenses. Gross margin tells you how efficiently the product itself is priced relative to what it costs to make; net margin tells you what's actually left after running the business around it.

Why operating expenses are optional

Leaving the Operating Expenses field blank isn't treated as "zero costs" — it's treated as "gross margin only," and the Net Profit Analysis section doesn't render at all. This matters for businesses that don't cleanly separate COGS from overhead, or for a quick gross-margin gut check where operating costs aren't relevant yet.

Reading the interpretation band

The tool labels gross margins under 20% as "low," 20–50% as "moderate," and above 50% as "high," but these thresholds are generic — a 36% gross margin is unremarkable for a retailer but would be exceptional for a grocery chain, so compare your result against your own industry rather than treating the label as an absolute verdict.