What is a good profit margin?

A good profit margin varies by industry. Grocery stores typically operate on 2–3% margins, while SaaS companies often achieve 70–80%. Retail averages 20–40%, restaurants 3–5%, and e-commerce 30–40%. Use industry benchmarks to set realistic targets.

What is the difference between gross margin and net margin?

Gross margin measures profit after cost of goods sold (COGS). Net margin measures profit after ALL expenses including operating costs, taxes, and interest. Gross margin shows production efficiency; net margin shows overall profitability.

How do I calculate profit margin on a product?

Subtract your product cost from the selling price to get profit. Divide profit by selling price and multiply by 100. Example: $100 price − $60 cost = $40 profit. $40 / $100 = 0.40 = 40% margin.

Is a 50% profit margin good?

A 50% profit margin is excellent for most industries. It's typical for software, digital products, and luxury goods. However, for retail or grocery, this would be unusually high. Compare against your specific industry benchmark.

Why is my profit margin different from my markup?

Margin is calculated from selling price; markup is calculated from cost. A 50% markup on a $100 cost gives a $150 price. But the margin is $50/$150 = 33.3%, not 50%. Use our markup calculator to see the exact difference, or calculate your Amazon FBA profit if you're selling on Amazon.

Profit Margin Calculator — Free Gross & Net Margin Tool (2026)

Free profit margin calculator — instantly calculate gross margin, net profit & markup percentages. No login required. 100% private. Trusted by e-commerce sellers.

Last Updated: March 25, 2026

Revenue ($/£/€)

Cost ($/£/€)

Instant Results

40.00%

Profit Margin

40.00

Profit

66.67%

Markup

How to Use

Enter your total revenue (selling price) in the Revenue field.
Enter your total cost (cost of goods sold) in the Cost field.
Your profit margin, profit, and equivalent markup appear instantly on the right.
Need to set a target price instead? Use our Markup Calculator to work backwards from your desired margin.

Formula Explained

Profit Margin (%) = ((Revenue − Cost) / Revenue) × 100

Revenue: = Selling price or total income from the sale
Cost: = Cost of goods sold (COGS) — direct costs to produce or acquire the item

Worked example: A product sells for $100 and costs $60 to produce. Profit = $100 − $60 = $40. Margin = $40 ÷ $100 = 0.40 = 40%.

Profit Margin Calculator — Free Gross & Net Margin Tool (2026)

How to Use

Formula Explained

References

Frequently Asked Questions