Profit Margin Calculator
Calculate gross profit margin from revenue and cost of goods sold. Shows margin %, gross profit, and cost ratio. Fully client-side — no account needed.
Added May 6, 2026
Input
Result
Enter a value for revenue (total sales) to see your result.
How it works
Calculates gross profit margin as a percentage of revenue. Shows how much of each dollar of revenue remains after subtracting the direct costs of production or goods sold.
Formula
Gross Margin % = (Revenue − COGS) / Revenue × 100
- Revenue
- Total sales or income
- COGS
- Cost of goods or services sold
- Gross Profit
- Revenue minus COGS
Step by step
- 01Subtract cost of goods sold (COGS) from revenue to get gross profit.
- 02Divide gross profit by revenue.
- 03Multiply by 100 to express as a percentage.
Examples
$50k revenue, $30k COGS
Selling $50,000 worth of goods that cost $30,000 to produce gives a 40% gross margin.
Inputs
- Revenue (total sales):
- 50000
- Cost of goods sold (COGS):
- 30000
Result
- Gross margin:
- 40
- Gross profit:
- 20000
SaaS product: $120k ARR, $36k costs
Software businesses often achieve 70%+ gross margins because marginal cost per unit is low.
Inputs
- Revenue (total sales):
- 120000
- Cost of goods sold (COGS):
- 36000
Result
- Gross margin:
- 70
- Gross profit:
- 84000
Frequently asked questions
What is a good profit margin?
It depends heavily on the industry. Retail businesses typically have 2–10% net margins. Software (SaaS) companies often reach 60–80% gross margins. Manufacturing falls around 30–40%. Compare to industry benchmarks rather than a universal target.
What is the difference between gross margin and net margin?
Gross margin subtracts only the direct costs of producing goods (COGS). Net margin also subtracts operating expenses, interest, and taxes. Net margin is a more complete picture of profitability but requires more inputs.
What is COGS?
COGS (Cost of Goods Sold) includes only the direct costs tied to producing what you sell — materials, manufacturing labour, and direct overhead. It excludes indirect costs like sales, marketing, and administration.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A 50% markup on a $10 item gives a $15 price and a 33% margin. Always clarify which your industry uses.