What is gross profit margin?

Gross Profit Margin = (Revenue − COGS) / Revenue × 100. It measures how much of each rupee of revenue is left after paying for the cost of goods sold (direct production costs). A higher gross margin means more money available for operating expenses and profit.

What is the difference between margin and markup?

Margin is calculated percentage of the selling price: (Selling Price − Cost) / Selling Price. Markup is calculated percentage of the cost: (Selling Price − Cost) / Cost. A 50% markup produces a 33% margin. They are not interchangeable.

What is a good profit margin?

It depends on the industry. Grocery/retail: 2–5% net margin. Software/SaaS: 15–25%+. Consulting: 10–20%. Manufacturing: 5–10%. Compare your margins against industry benchmarks rather than a universal standard.

What is net profit margin?

Net Profit Margin = (Revenue − COGS − Operating Expenses − Taxes) / Revenue × 100. It shows the percentage of revenue that becomes actual profit after all expenses. It is the most comprehensive profitability measure.

Profit Margin Calculator

⚠️ Not financial advice. Results are illustrative only and should not be used as the basis for any investment, tax, or financial decision. Consult a qualified financial adviser or chartered accountant before acting on any figure shown.

How the Profit Margin Calculator works

The profit margin calculator computes gross margin, operating margin, net margin, and markup percentage from your revenue, cost of goods sold (COGS), and operating expenses. It also solves in reverse — enter a target margin to find the required selling price or the maximum allowable cost. Entrepreneurs, product managers, and finance teams use it to quickly evaluate pricing decisions and profitability targets.

Gross margin vs net margin

Gross margin = (Revenue − COGS) / Revenue × 100. It measures the efficiency of production and direct delivery before overhead. Net margin = (Revenue − All expenses) / Revenue × 100, accounting for operating expenses, interest, and tax. A business with 60% gross margin but 5% net margin has high overhead relative to its revenue — a signal to investigate fixed cost structure. The calculator separates both metrics so you can diagnose which layer of the P&L needs attention.

Margin vs markup: the key difference

Margin and markup are frequently confused. Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. A product that costs ₹100 and sells for ₹150 has a 33% margin but a 50% markup. If you quote a "50% margin" when you mean "50% markup," you will underprice by a significant amount. The calculator displays both simultaneously and converts between them so you can communicate clearly with manufacturers, distributors, and colleagues.

GST impact on Indian businesses

For Indian businesses, GST affects the price customers pay but should not be included in revenue or cost when calculating operating margins — GST is collected on behalf of the government, not retained as income. However, if you are comparing margins against international benchmarks or presenting to investors unfamiliar with Indian tax structure, it is worth noting whether prices in your model are inclusive or exclusive of GST. The calculator lets you toggle GST-inclusive vs exclusive pricing for accurate Indian-context margin analysis.

Target margin reverse calculation

The reverse mode is particularly useful for pricing new products. Enter your target gross margin percentage and your known COGS — the calculator outputs the minimum selling price that achieves that margin. For example, to achieve a 40% gross margin on a product costing ₹600 to make, the minimum selling price is ₹600 / (1 − 0.40) = ₹1,000. This approach ensures pricing decisions start from required profitability rather than guesswork or competitor matching alone.