Profit Margin Calculator

Gross profit margin is the percentage of revenue remaining after deducting the cost of goods sold (COGS). It is calculated as: (Revenue − COGS) ÷ Revenue × 100. For example, if you sell a product for $80 and it costs $50 to produce, your gross margin is (80 − 50) ÷ 80 × 100 = 37.5%. A higher gross margin means more money is available to cover operating expenses and generate net profit.

Profit margin (or gross margin) is calculated as a percentage of the selling price, while markup is calculated as a percentage of the cost. If your cost is $50 and selling price is $80: margin = (80 − 50) ÷ 80 = 37.5%, markup = (80 − 50) ÷ 50 = 60%. This distinction matters because a 50% markup does not equal a 50% margin — the markup will always be higher than the corresponding margin.

A "good" margin depends heavily on your industry. SaaS businesses typically achieve 70–85% gross margins, while restaurants operate at 3–9%. Retail averages 25–50%, manufacturing 20–35%. The industry benchmarks table in this calculator shows typical ranges for 15 sectors. More important than hitting an industry benchmark is tracking whether your margins are improving over time and whether they adequately cover your fixed operating expenses.

The break-even price is the minimum selling price at which you neither make a profit nor a loss — it equals your cost per unit. Any selling price above break-even generates a positive margin. If your cost is $50, your break-even price is $50. Selling at $80 gives you a $30 profit per unit. This calculator automatically shows your break-even price so you always know your floor.

Switch to "Target Margin" mode when you know your cost and the margin percentage you need — and want to calculate the required selling price. Enter your cost price and your desired margin (e.g., 40%). The calculator computes the selling price automatically using the formula: Selling Price = Cost ÷ (1 − Target Margin). This is useful for setting prices in wholesale, B2B contracts, or when working backward from financial targets.

The "Cost Increase Sensitivity" chart shows how your total profit changes if your cost of goods increases by 5%, 10%, 15%, or 20%. This is critical for financial planning — understanding how a supplier price hike or materials cost increase affects your profitability. If a 10% cost increase wipes out most of your profit, you have thin margins and should consider pricing adjustments or cost reduction.

Gross margin accounts only for the direct cost of producing your product (COGS). Net margin subtracts ALL costs — including operating expenses (salaries, rent, utilities, marketing), interest, and taxes. For example, a business with 40% gross margin might have only 8% net margin after accounting for operating expenses. This calculator focuses on gross margin, which is the foundational metric for product pricing decisions.

There are two levers: increase selling price or reduce cost. On the revenue side: implement value-based pricing, add premium product tiers, bundle products, reduce discounting. On the cost side: negotiate better supplier terms, increase order volume for bulk pricing, optimize production processes, reduce waste, and automate repetitive tasks. ERP systems like Odoo provide real-time COGS tracking, helping you identify and eliminate margin leakage across your operations.