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Calculators/Business & SaaS
Profit Margin Calculator
Calculate gross margin, operating margin, and net margin — the three margins every business owner must know.
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Margin Summary
Gross Profit$110,000
Gross Margin44.0%
Operating Profit$50,000
Operating Margin20.0%
Gross Margin
44.0%
Operating Margin
20.0%
Net Profit
$50,000
How to Use This Calculator
1
Enter your total revenue
Total sales or income for the period (month, quarter, or year). Use consistent time periods for all three inputs.
2
Enter Cost of Goods Sold (COGS)
COGS = direct costs to produce what you sell: materials, direct labor, manufacturing costs, wholesale cost. Does NOT include overhead, salaries, marketing.
3
Enter operating expenses
All other costs to run the business: salaries, rent, marketing, software, utilities, insurance. This is everything above COGS that keeps the lights on.
4
Understand the three margins
Gross Margin = (Revenue - COGS) ÷ Revenue. Shows production efficiency. Operating Margin = includes all expenses. Net Margin = after taxes (add your tax obligation for the full picture).
Real-World Examples
Texas Restaurant
Revenue
$850,000
COGS (food/bev)
$297,500 (35%)
Operating Expenses
$425,000 (50%)
ResultGross: 65% — Net: 15%
Good restaurant margins. Industry average net margin is 3–9%, so 15% is exceptional. Texas locations benefit from lower rent in many markets.
SaaS Company
Revenue
$1,200,000
COGS (hosting/support)
$180,000 (15%)
Operating Expenses
$720,000 (60%)
ResultGross: 85% — Net: 25%
High gross margins are SaaS's hallmark. 85% gross is typical. 25% operating margin is healthy — many SaaS companies run at negative margins early.
Frequently Asked Questions
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