Crowdfunding Tools

Profit Margin Calculator

Use this tool to determine your Gross Profit Margin, Operating Margin, Net Profit Margin, and how your business compares to your peers.

Revenue and Costs

How much revenue do you produce annually?


What are your costs of goods sold?



What are your sales & marketing expenses?


What are your general & administrative expenses?


What are your research & development expenses?


What are your depreciation & amortization expenses?


What is your interest expense?


What is your tax expense?



What is the industry sector of your business?

During the business planning phase, you likely estimated your profit margins based on the price you thought you could charge and the price you thought you would pay to make your product. As the business evolved, you found that your estimates were far from accurate and both prices and costs fluctuated, taking your profit margins along for the ride.

This calculator can help determine your gross profit margin, operating margin, net profit margin, and how your business compares to peers in your industry.

How to Calculate Profit Margin

Profit margin is calculated by subtracting the cost from the revenue, divided by the revenue. Basically, you take the money you made minus the money you spent and divide that figure by the money you made to give you the amount represented as a percentage.

Gross Profit Margin Formula

Gross Profit Margin =

Revenue - COGS


For example, if you sell a product for $55 and it costs you $45 to make, your gross margins would be $55 - $45 / $55 or 18%. The problem is that although COGS may reflect the product cost, it likely does not incorporate all the expenses your business incurred.

The process of calculating gross, operating, and net profit margins is a matter of narrowing in on the variable costs incurred.

Operating Profit Margin

Operating profit margin is a measurement of what proportion of revenue is left over after paying for variable costs of doing business such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.

Operating Profit Margin Formula

Operating Margin =

Gross Profit - Operating Expenses


Net Profit

Net profit margin is the percentage of revenue remaining after all operating expenses, interest, taxes, and preferred stock dividends (but not common stock dividends) have been deducted from a company's total revenue.

Net margin is the percentage of revenue that remains after deducting all expenses. If you’re a sole-proprietor, this would be the percentage of revenue that ends up in your pocket. If you struggle with differentiating between gross vs. net profit, as a mnemonic to help remember, you can think “gross profits are grossly overstated, net is what you get.”

Net Profit Margin Forumula

Net Margin =

Operating Profit - Interest - Taxes


Profit Margin Variability

As you can see, the process of calculating your profit margins is a matter of including more and more variable costs to find your true profitability. Nearly every business deals with variability in their economics. Sometimes, the dynamics can work in favor of the business — such as a decline in costs due to economies of scale.

Other times, an unforeseen tax implication, lawsuit, labor strike, or other event can cause profit margins to decline, if not erase and turn into a loss.

This is why calculating your profit margins should be an ongoing process. Bookmark this calculator and set up a business profile on EquityNet to get insights for your industry, funding for your business, and more.