Profit Margin Calculator — Instant, Free Results

How it works

Enter your total revenue and your cost of goods sold (COGS) — the direct costs to produce or buy what you sell. Gross profit is what remains. Add your operating expenses (rent, salaries, marketing) to see operating margin. Add your tax rate to see true net profit margin after tax. Results update on every keystroke; there is no submit button.

Tax rates pre-fill from your selected region: 21% for the USA (federal corporate), 25% for the UK (corporation tax, 19% small profits rate applies under £50,000), and 27% for South Africa (standard corporate). Override the rate if your business has a different effective rate.

Common mistakes

• Confusing margin with markup — margin is profit as a percentage of selling price; markup is profit as a percentage of cost. A 50% markup on a $40 cost gives a $60 selling price, but that is only a 33.3% margin. Owners who treat the two as interchangeable typically over-discount and under-earn.
• Using gross margin for owner-draw decisions — gross margin only deducts COGS, so it looks healthy even when rent, payroll, and software are eating the rest. For "how much can I take out of the business?" the right number is net margin, after operating expenses and tax. A 45% gross margin can quietly hide a 4% net margin.
• Forgetting payroll taxes and contractor fees — operating expenses must include employer-side payroll taxes (roughly 7.65% in the US, 15.05% employer NI in the UK), workers' comp, and any contractor or platform fees. Leaving them out can overstate operating margin by 3–5 percentage points.

When to use this calculator

Use this calculator when you already have a selling price (or actual revenue) and want to check whether existing margins are healthy or have eroded. It is the right tool for diagnosing why monthly profit is lower than expected and for comparing margins across products in your line-up.

If you are setting a brand-new price from cost, the Pricing Calculator is more direct. If you want to walk every line of the income statement from revenue down to net profit, use the Net Profit Calculator instead.

Worked example

A specialty coffee roaster trading in the UK closes the year with £420,000 of revenue. Cost of goods sold — green beans, packaging, freight, and the wages directly tied to roasting — comes to £210,000. Operating expenses — café rent, two baristas, accounting software, insurance, marketing — total £140,000. Corporation tax is the small profits rate of 19% (taxable profit sits below £50,000).

The waterfall runs as follows: gross profit is £420,000 − £210,000 = £210,000, which divided by revenue gives a 50% gross margin — healthy for specialty coffee, where 45–55% is typical. Operating profit is £210,000 − £140,000 = £70,000, a 16.7% operating margin. Corporation tax at 19% on £70,000 is £13,300, leaving £56,700 of net profit and a 13.5% net margin.

A 13.5% net margin is comfortably above the 10% small-business floor and signals the business is funding owner draws, future stock buys, and a small reserve from the same year's trading. If gross margin had instead dropped to 40% — perhaps because a coffee-bean supplier raised prices and the roaster absorbed the cost — gross profit would have fallen to £168,000, operating profit to £28,000, and net margin to roughly 5.4%. That single supplier decision is the difference between a healthy and a marginal year, and it is the kind of erosion this calculator surfaces in seconds.

Frequently Asked Questions

Glossary

COGS (Cost of Goods Sold)

The direct cost of producing or buying the goods you sold during a period — raw materials, manufacturing labour, freight in.

Operating Expenses (OpEx)

Ongoing costs to run the business that are not tied to a specific unit sold — rent, salaries, software, marketing.

Net Profit

The bottom-line profit after all costs and taxes have been subtracted from revenue.

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Read the comparison

Try these scenarios

Pre-filled examples — click any chip to load the inputs and result.

• Retail store: $250k revenue / $150k COGS
• SaaS: $1.2M revenue / $200k COGS
• Agency: $500k revenue / $50k COGS

How to calculate profit margin

1. 1
   Pick your regionToggle USA, UK, or South Africa to load the right currency symbol and pre-fill the corporate tax rate.
2. 2
   Enter total revenueType your sales or revenue for the period in the Revenue field.
3. 3
   Enter cost of goods sold (COGS)Add the direct costs to produce or buy what you sold.
4. 4
   Add operating expenses (optional)Add rent, salaries, marketing, and overhead to unlock the operating margin result.
5. 5
   Read your margin tierGross, operating, and net margin display with color-coded interpretation — green is healthy, amber is caution, red needs action.