Revenue & Costs
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Direct costs: materials, production, direct labor
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Rent, salaries, marketing, R&D, admin (excluding COGS)
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Reverse Calculator
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The Three Profit Margins Explained
Gross Profit Margin
Gross Margin = (Revenue - COGS) / Revenue × 100. This shows how efficiently you produce your product or service before accounting for overhead. A 40% gross margin means you keep $0.40 of every dollar of revenue after direct costs.
Operating Profit Margin
Operating Margin = (Revenue - COGS - Operating Expenses) / Revenue × 100. This is EBIT (earnings before interest and taxes) as a percentage of revenue. It reflects core business efficiency including overhead.
Net Profit Margin
Net Margin = Net Income / Revenue × 100. The bottom line — what you keep after all expenses. Industry benchmarks: retail (2-5%), software (20-30%), restaurants (3-9%), healthcare (5-10%).