Profit Margin Calculator

It depends on the industry. Retail and e-commerce typically see 5-20% net margins, service businesses 15-40%, and software/digital products 50-80%. For side hustles, aim for at least 20% net margin to make the effort worthwhile after accounting for your time.

Gross margin is revenue minus COGS (direct costs). Operating margin subtracts operating expenses like rent and software. Net margin is the bottom line after all expenses and taxes. Each level reveals different business health — you can have a strong gross margin but a weak net margin if overhead is too high.

Three levers: increase prices (test small increases, often customers accept 5-10% hikes), reduce COGS (negotiate with suppliers, buy in bulk, find alternatives), or cut operating expenses (audit subscriptions, renegotiate leases, automate manual tasks).

COGS includes all direct costs to produce or acquire your product: raw materials, manufacturing, wholesale price, packaging, and direct labor. It does not include overhead like rent, marketing, or administrative costs — those fall under operating expenses.

Use gross margin to evaluate product-level profitability and pricing decisions. Use net margin to understand overall business health after all costs. If your gross margin is healthy but net margin is low, the problem is overhead, not pricing.

Break-even revenue is the minimum sales needed to cover all your costs. Below this number you are losing money. This calculator estimates it based on your current cost structure and margin percentages.