It is the only number a small business should be tracking monthly. Compare to last month, last quarter and last year. A falling gross margin usually means the cost of inputs has risen; a falling net margin usually means the operating expenses have crept up.
Calculator
Formula used
Gross margin = (revenue − COGS) ÷ revenue · Net margin = (revenue − all costs) ÷ revenue
How to use the Business Profit Margin Calculator
- Enter the revenue for the period.
- Add the cost of goods sold (materials, direct labour, sales commissions).
- Add operating expenses (rent, marketing, software, salaries).
- Optionally add the capital invested to compute ROI.
About this tool
The Business Profit Margin Calculator is built for speed and accuracy: every calculation runs in your browser, so your data never leaves your device and the result updates as you type. It works equally well on a phone, a tablet or a desktop, and it is free to use as many times as you like.
Common use cases
- Reviewing the month-end P&L.
- Comparing two product lines.
- Pitching the financials to an investor.
- Setting the next quarter's pricing.
Tips for the best result
- Use the latest figures you have - even a small change in rate or term can shift the outcome by hundreds.
- For annual figures, divide by 12 to get a monthly number you can compare with the result.
- Bookmark this page and revisit the calculation as the inputs change.
Frequently asked questions
What is a good net margin?
It depends on the industry. Retail and restaurants often run 5-10% net; SaaS companies target 20-30% once scaled; agencies and consultancies 10-20%. The calculator is a tool, the target is yours.
What is the difference between gross and net?
Gross margin is revenue minus the direct cost of producing it (materials, direct labour). Net margin subtracts everything else, including rent, software and taxes. Net is the number on the bottom line.
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