Gross Profit
$150,000
Gross Margin
60.0%
Operating Profit
$75,000
Operating Margin
30.0%
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after all costs are deducted. Gross profit margin considers only cost of goods sold (COGS), while operating profit margin also includes operating expenses like rent, salaries, and utilities. A higher margin indicates a more profitable business that retains more of each dollar earned.
What is the difference between margin and markup?
Margin and markup are both ways to express profitability but use different bases. Margin is profit as a percentage of revenue (selling price): Margin = Profit / Revenue. Markup is profit as a percentage of cost: Markup = Profit / Cost. For example, buying at $60 and selling at $100 gives a 40% margin but a 66.7% markup.
What is a good profit margin?
A "good" profit margin varies widely by industry. Software companies often achieve 70-80% gross margins, while grocery stores may see only 1-3% net margins. As general benchmarks: a 5% net profit margin is considered low, 10% is healthy, and 20%+ is excellent. Compare your margins to industry averages for the most meaningful assessment.
Disclaimer: This calculator provides estimates based on current IRS rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your filing status, state of residence, deductions, and individual circumstances. Always consult a qualified tax professional or CPA before making financial decisions. Read our terms
This calculator uses official rates and thresholds from:
Last verified: March 2026 · Tax year 2025. Results are indicative — consult a qualified accountant for personalised advice.