Profit Margin Calculator

Input accuracy

Are you using real, current numbers — not rough guesses that flatter the result?

Benchmark fit

Is your result healthy for your specific business model, not just positive?

Sensitivity

Which single input, if wrong, would change the result most?

Time horizon

Does this hold up over 12 months, or only at today's volume?

Next decision

What should change in the business because of this number?

There is no single profit margin — there are three, and the gap between them tells you where money is actually going. A business can have excellent gross margin and still lose money at the net line.

This calculator computes gross, operating and net margin from one set of figures so the leak is visible rather than inferred.

Free calculator

Calculate gross, operating and net margin from one set of figures, so you can see exactly where profit is lost.

Revenue£

Cost of goods sold£

Operating expenses£

Other costs£

Results

Gross profit£70.0k (70.0%)

Operating profit£30.0k (30.0%)

Net profit£20.0k

Net margin20.0%

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The three margins and what each reveals

Gross margin is revenue minus the direct cost of delivery — it tells you whether the product itself is economically viable. Operating margin then deducts overheads such as salaries, marketing and rent, revealing whether the organisation around the product is affordable. Net margin deducts everything else, including interest and tax.

A healthy gross margin with a negative operating margin is a very specific diagnosis: the product works, the cost structure around it does not.

Where profit usually leaks

For software businesses the leak is almost always operating expenses, since gross margin is structurally high. For ecommerce and physical products it is usually cost of goods, fulfilment and returns, where a few percentage points decide whether the business works at all.

Margin against growth

Negative net margin is normal and often correct for a company investing in growth. It becomes a problem when it is unintentional — when spending has drifted rather than being deliberately deployed against a return.

How this calculator works

Enter revenue for the period.
Enter cost of goods sold, operating expenses, and other costs separately.
The calculator returns gross, operating and net profit in both currency and percentage terms.

Direct answer — Profit Margin Calculator

Calculate gross, operating and net profit margin from one set of figures and see exactly where profit is lost. Free.

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Frequently asked questions

What is a good net profit margin?

It varies widely by industry: software businesses can exceed 20% at maturity, retail often runs at 2–5%, and agencies typically land at 10–20%. Compare against your own category rather than across them.

What is the difference between gross and net margin?

Gross margin deducts only the direct costs of delivery. Net margin also deducts overheads, interest and tax, so it reflects what the business actually keeps.

Last reviewed 8 August 2026