Profit Margin Calculator

Profit margin is profit as a percentage of revenue. This calculator gives both gross margin (after product cost) and net margin (after all expenses).

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Net profit margin20.0%
Gross profit$28,000
Gross margin56.0%
Net profit$10,000
Healthy margin. Check how far ad cost or returns can rise before profit hits zero.
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What is profit margin?

Gross margin = (revenue − cost of goods) ÷ revenue. Net margin = (revenue − all costs) ÷ revenue. Gross shows product economics; net shows business health.

How to use the profit margin calculator (formula)

Net profit margin = Net profit ÷ Revenue × 100 Gross profit = Revenue − Cost of goods sold Gross margin = Gross profit ÷ Revenue × 100 Net profit = Gross profit − Operating expenses (incl. ads)

What each field means

  • Revenue — Total revenue.
  • Cost of goods sold — Cost of goods sold.
  • Operating expenses (incl. ads) — All other expenses including ads, salaries and tools.

Worked example

Using these numbers: revenue $50,000, cost of goods sold $22,000, operating expenses (incl. ads) $18,000.

The net profit margin is 20.0%.

  • Gross profit: $28,000
  • Gross margin: 56.0%
  • Net profit: $10,000

What is a good profit margin?

Ecommerce gross margins of 40–70% are common; net margins of 10–20% are healthy for most online businesses.

Tips to improve your result

  • Watch net margin monthly, not only revenue.
  • Ad spend is usually the biggest operating expense to control.
  • Improve margin with price and AOV before cutting quality.
  • Compare margins by product to find what to push.

Frequently asked questions

How do I calculate profit margin?

Profit ÷ revenue × 100.

Gross vs net margin?

Gross removes product cost only; net removes every expense.

Is margin the same as markup?

No — markup divides profit by cost, margin by price.

How can I improve profit margin?

Raise prices, increase AOV, lower ad cost per order and reduce returns.

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