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).
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)
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.
You might also need
E-commerce Profit CalculatorNet profit and margin per order after product, shipping, fees and ads.
Product Pricing CalculatorThe selling price that hits your target profit margin.
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