Profit Margin Calculator

Calculate gross and net profit margins for products and businesses.

These calculations are for financial analysis purposes only. Actual business profitability depends on accounting standards, tax rules, and many other factors. Consult a financial professional.

Cost Price / Revenue (₹)

Selling Price (₹)

Profit

Margin

Markup

ROI

Margin = Profit / Revenue × 100 | Markup = Profit / Cost × 100

How It Works

Enter the cost price and selling price (or revenue and expenses). The calculator computes gross profit, net profit margin percentage, and markup percentage.

**Profit Margin Calculator — Measure Business Profitability**

Profit margin is one of the most important metrics for any business. It tells you how much of each rupee of revenue is actual profit after costs. Whether you're pricing a product, evaluating an investment, or reporting to stakeholders, understanding profit margins is essential.

**Key Profit Metrics**

**Gross Profit Margin**
Formula: Gross Profit Margin = ((Revenue – COGS) / Revenue) × 100
COGS = Cost of Goods Sold (direct costs of production)
This measures how efficiently you produce and sell goods.

**Net Profit Margin**
Formula: Net Profit Margin = (Net Profit / Revenue) × 100
Net Profit = Revenue – All Expenses (COGS + operating expenses + taxes + interest)
This is the bottom line: how much profit remains after every cost.

**Operating Profit Margin (EBIT Margin)**
Formula: (Operating Profit / Revenue) × 100
Excludes interest and tax but includes operating expenses.

**Markup vs. Margin**

Markup and margin are often confused:
- **Markup** = (Profit / Cost) × 100 — how much above cost you're selling
- **Margin** = (Profit / Selling Price) × 100 — profit as a percentage of revenue

Example: Cost = ₹100, Selling Price = ₹125
- Markup = (25/100) × 100 = 25%
- Margin = (25/125) × 100 = 20%

A 25% markup is NOT the same as a 25% margin!

**Industry Benchmark Margins**

- **Software/SaaS** — 60–80% gross margin
- **E-commerce** — 20–40% gross margin
- **Restaurants** — 3–9% net margin
- **Retail** — 2–5% net margin
- **Healthcare** — 5–10% net margin
- **Banking** — 15–30% net margin

**How to Improve Profit Margins**

1. Increase prices (requires competitive analysis)
2. Reduce COGS (better supplier negotiation, bulk buying)
3. Reduce operating expenses (efficiency improvements)
4. Increase volume (fixed costs spread over more units)
5. Shift product mix toward higher-margin items

Frequently Asked Questions

It varies by industry. Software companies often have 60–80% gross margins; retailers operate at 2–5% net margins. Compare your margins to industry benchmarks.

Gross margin only subtracts cost of goods sold (COGS) from revenue. Net margin subtracts all expenses including operating costs, taxes, and interest.

Markup is profit as a percentage of cost. Margin is profit as a percentage of selling price. A 25% markup equals a 20% margin.

Selling Price = Cost / (1 - Margin). For a 30% margin: Selling Price = Cost / 0.70. If cost is ₹100, selling price = ₹142.86.

EBITDA margin = EBITDA / Revenue × 100. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) is a proxy for operating cash flow used by investors.