Profit Margin Calculator
Calculate gross margin, operating margin, and net profit margin — three key measures of business profitability.
Understanding the Three Profit Margins
Gross margin reveals how efficiently you produce or deliver your product. A 60% gross margin means $0.60 of every revenue dollar remains after direct costs. Operating margin shows how well you run the overall business after fixed overhead. Net margin is the bottom line — what you actually keep after everything including taxes.
Why Gross Margin Is the Leverage Point
A 5-percentage-point improvement in gross margin has a much larger impact than the same improvement in operating efficiency. If revenue is $1M and gross margin improves from 40% to 45%, that's an extra $50,000 in gross profit before any other costs change. This is why pricing power and supplier negotiations are so high-leverage.
Industry Benchmarks
SaaS/software companies often run 70–80% gross margins. Manufacturing: 25–40%. Retail grocery: 20–30%. Services: 50–70%. Net margins follow similar patterns — compare yourself to your specific industry, not generalized averages.