Profit Margin Analysis

Required Inputs

Total Revenue (Sales)

Cost of Goods Sold (COGS)

Direct costs to produce goods/services

Operating Expenses

Rent, salaries, marketing, utilities, etc.

Other Expenses

Interest, taxes, depreciation, etc.

Optional Inputs

Units Sold

Cost Per Unit

Selling Price Per Unit

Business Tax Rate (%) Federal corporate tax rate (21% for C-corps)

Profitability Metrics

Gross Profit

Gross Profit Margin

Operating Profit

Operating Margin

Net Profit

Net Profit Margin

Markup %

Profit Per Unit

Tax Owed

After-Tax Net Profit

After-Tax Net Margin

Industry Benchmark Comparison

Compare your margins against typical industry standards:

Industry	Gross Margin	Operating Margin	Net Margin
Retail	25-50%	5-10%	3-7%
Restaurants	60-70%	5-15%	3-9%
Software/SaaS	75-90%	10-30%	10-25%
Manufacturing	20-40%	5-15%	3-10%
E-commerce	40-60%	5-15%	3-10%
Consulting	60-80%	15-30%	10-20%

Understanding Profit Margins

Types of Profit Margins

Gross Profit Margin: (Revenue - COGS) ÷ Revenue × 100

Operating Profit Margin: (Revenue - COGS - Operating Expenses) ÷ Revenue × 100

Net Profit Margin: (Revenue - All Expenses) ÷ Revenue × 100

Markup: (Selling Price - Cost) ÷ Cost × 100

Margin vs Markup

Margin and markup are related but different concepts:

Margin: Profit as a percentage of selling price

Markup: Profit as a percentage of cost

A 50% markup equals a 33% margin

A 100% markup equals a 50% margin

How to Improve Profit Margins

Increase prices (while maintaining value)

Reduce COGS through better supplier negotiations

Improve operational efficiency to lower expenses

Focus on higher-margin products/services

Reduce waste and improve inventory management

Increase sales volume to spread fixed costs

Profit Margin Calculator