Use the Profit Margin Calculator
About This Profit Margin Calculator
Profit margins vary significantly by industry. Software companies often achieve 70%+ gross margins, while retail averages 20–30%. Net profit margins of 10% are considered healthy for most small businesses. Low margins aren't inherently bad if volume is high, but they leave little room for error.
How the Calculation Works
Gross margin % = (revenue − COGS) / revenue × 100. Net margin % = net profit / revenue × 100.
Using This Tool for Business Planning
Business calculators are most powerful when used for scenario planning. Run your best-case, base-case, and worst-case numbers to understand your range of outcomes. This helps you make more confident decisions and identify the assumptions that matter most to your results.
Key Business Metrics
Revenue alone doesn't tell the full story — profitability, cash flow, and growth rate are equally important. Track your key metrics monthly and compare to the same period last year. Trends matter more than any single data point.
Frequently Asked Questions
Q: What profit margin should I target?
A: It depends heavily on your industry. SaaS companies often target 70%+ gross margins. Retail typically runs 20–40%. Service businesses vary widely. Research your industry benchmarks and aim to be in the top quartile.
Q: How do I improve my margins?
A: Either increase revenue without proportionally increasing costs, or reduce costs without sacrificing revenue. The highest-leverage levers are usually pricing (easiest to adjust) and your biggest cost categories.
Disclaimer: This calculator is for planning purposes only and does not constitute financial or business advice.