How it works
Gross margin subtracts direct costs only. Net margin also subtracts the additional expenses you enter. Use one consistent unit or accounting period for every input.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
Revenue: $10,000; COGS: $5,500; Other costs: $2,000; Gross profit: $4,500; Gross margin: 45.0%; Net profit: $2,500; Net margin: 25.0%; Markup on total cost: 33.3%.
Calculation method
Margin divides profit by revenue; markup divides profit by cost. A positive gross margin can coexist with a negative net margin when other expenses consume the difference.
Interpretation
A target margin can be reached through a price increase, a cost reduction, or both. Required revenue holds entered costs constant, so it does not model expenses that rise with sales.
Limitations
Include costs once only. Operating, advertising and overhead inputs replace the basic other-cost total in advanced mode.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- SBA — Break-even pointContribution, variable costs and fixed-cost break-even context; tool-specific extensions are explained above.
Frequently asked questions
Is markup the same as profit margin?
No. Margin divides profit by revenue; markup divides profit by cost. A $100 sale with $60 total cost has a 40% margin and about 66.67% markup.
What is a worked example for Profit Margin?
Revenue: $10,000; COGS: $5,500; Other costs: $2,000; Gross profit: $4,500; Gross margin: 45.0%; Net profit: $2,500; Net margin: 25.0%; Markup on total cost: 33.3%.