Back to Tools
Financial Tool
Profit Margin Calculator
Calculate gross, operating, and net profit margins to understand your business profitability.
Profit Margin Calculator
Enter your financial data to calculate profit margins
Revenue Breakdown
How your revenue is allocated
Margin Comparison
Different profit margin types
Profit Margin Results
Your calculated profit margins
Total Revenue
$100,000
Gross Profit Margin
40.00%
$40,000 gross profit
Operating Profit Margin
15.00%
$15,000 operating profit
Net Profit Margin
10.00%
$10,000 net profit
Expense Breakdown
COGS:$60,000 (60.0%)
Operating:$25,000 (25.0%)
Taxes:$3,000 (3.0%)
Interest:$2,000 (2.0%)
Understanding Profit Margins
Profit margins are key indicators of your business's financial health and efficiency. Here's what each margin tells you:
Types of Profit Margins:
- Gross Profit Margin: Shows how efficiently you produce goods/services. Higher is better, typically 50-70% for service businesses.
- Operating Profit Margin: Indicates operational efficiency after all operating expenses. Good margins are typically 10-20%.
- Net Profit Margin: Your bottom line after all expenses. Healthy margins vary by industry but 5-15% is common.
Tips to Improve Profit Margins:
- Reduce cost of goods sold through better supplier negotiations
- Increase prices strategically without losing customers
- Improve operational efficiency to reduce expenses
- Focus on higher-margin products or services
- Automate processes to reduce labor costs