Free Tool

Profit Margin Calculator

Calculate gross, operating, and net profit margins instantly.
Understand your business profitability at a glance.

$

Total sales revenue or selling price per unit

$

Cost of goods sold (COGS) or cost per unit

Know your margins

Enter your revenue and costs to instantly calculate profit margin, markup percentage, and profit per unit.

The profit margin formula
Margin = (Revenue - Cost) / Revenue × 100

Profit margin vs markup

These terms are often confused, but they measure different things. Understanding both is crucial for pricing.

%

Profit Margin

Profit as a percentage of the selling price. Shows what portion of each sale is profit.

Formula
(Revenue - Cost) / Revenue × 100
Example
Sell for $100, cost $60 → 40% margin

Markup

Profit as a percentage of the cost. Shows how much you've added on top of your cost.

Formula
(Revenue - Cost) / Cost × 100
Example
Sell for $100, cost $60 → 66.7% markup

Typical profit margins by industry

Profit margins vary widely by industry. Here's how different sectors typically perform.

Software/SaaS70-85%
Consulting50-80%
eCommerce20-45%
Retail25-50%
Restaurants3-9%
Manufacturing25-35%
Real Estate15-25%
Healthcare10-20%
Grocery2-5%

These are gross profit margin averages and can vary significantly based on business model, scale, and location.

How to improve your profit margins

Increase prices strategically

Test small price increases. A 10% price increase with 5% volume loss still improves margins significantly. Focus on communicating value.

Reduce costs

Negotiate with suppliers, buy in bulk, optimize operations, or find cheaper alternatives without sacrificing quality.

Focus on high-margin products

Identify which products or services have the best margins and focus your marketing and sales efforts there.

Upsell and cross-sell

Higher-priced items often have better margins. Bundle products, offer premium versions, and suggest complementary items.

Launching a new product?

Validate your pricing and build demand before you launch. Create a waitlist to gauge interest and collect early customers.

Before choosing Waitlister, I compared several alternatives. Honestly, Waitlister stands far ahead. The product is more intuitive, faster to set up, and clearly built with real attention to detail.
J
John
Verified Purchaser, AppSumo

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