Profit Margin Calculator
Calculate gross, operating and net margins. Also find selling price from target margin.
Understanding Your Three Profit Margins
Profit margin analysis is the backbone of financial health assessment. Gross Margin shows how efficient your production or service delivery is. Operating Margin reveals how well you manage overhead costs. Net Margin is what you actually keep after all expenses including tax. For Indian businesses, tracking these margins quarterly helps identify cost pressures early, justify pricing changes and communicate financial health to investors or lenders.
Frequently Asked Questions
What is a good profit margin for a small business in India? ▼
Benchmarks vary by industry: Retail: 2–5% net margin (thin margins, high volume). Software/SaaS: 15–30% net margin. Professional services: 10–25%. Manufacturing: 5–15%. E-commerce: 3–8%. FMCG: 5–10%. Compare your margins to industry benchmarks — being below average signals a cost or pricing problem.
What is the difference between gross profit and net profit? ▼
Gross Profit = Revenue − Cost of Goods Sold (COGS). It shows production efficiency. Net Profit = Revenue − All Costs (COGS + Operating Expenses + Interest + Taxes). It shows overall profitability after every expense. A business can have high gross margins but negative net margins if operating expenses are out of control.
How to calculate profit margin percentage? ▼
Gross Margin % = (Revenue − COGS) ÷ Revenue × 100. Net Margin % = Net Profit ÷ Revenue × 100. Example: Revenue ₹10 lakh, COGS ₹6 lakh, Expenses ₹2 lakh, Tax ₹0.5 lakh → Gross Margin = 40%, Operating Margin = 20%, Net Margin = 15%.
What is markup vs margin? ▼
Margin: profit as a percentage of selling price. Markup: profit as a percentage of cost. Example: Cost ₹100, Selling Price ₹150. Margin = (50÷150)×100 = 33.3%. Markup = (50÷100)×100 = 50%. Same ₹50 profit — but margin and markup percentages are different. Retailers use markup; finance teams use margin.
How to improve profit margins for a small business? ▼
To improve gross margin: negotiate better supplier prices, reduce waste, increase prices. To improve operating margin: cut overhead costs, automate processes, improve employee productivity. To improve net margin: tax planning (Section 80C, depreciation), reduce interest costs by prepaying loans, move to GST composition scheme if eligible.