What is a profit margin?
The share of each sales dollar you keep as profit, written as a percentage. A 30% margin means 30 cents of every dollar of revenue is profit and 70 cents went on costs.
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Profit Margin Calculator
Gross and net profit margins from revenue, cost of goods sold and operating expenses.
Gross Margin = (Revenue − COGS) / Revenue × 100
Frequently asked questions
What is the difference between gross and net margin?
Gross margin counts only the direct cost of producing what you sell (cost of goods sold). Net margin goes further and also subtracts operating expenses like rent, wages and marketing, so it is the truer bottom-line figure.
Why does margin matter more than raw profit?
A big profit on huge revenue can still be a thin, fragile margin. The percentage shows how much cushion you have if costs rise or prices fall, and lets you compare businesses of very different sizes on equal footing.
How do I read the gauge?
The needle sweeps from low margins on the left to healthy margins on the right, with the colour shifting from red through to green as the percentage climbs. A needle near the red end warns that very little of each sale is being kept as profit.
Where is this used in real life?
Retail — a shop buying stock at $60 and selling at $100 has a 40% gross margin. Restaurants — typically thin net margins of 3–9%, so cost control is critical. Investing — comparing two companies' net margins to judge which turns sales into profit more efficiently before buying their shares.