Profit Calculator
Profit has three commonly quoted forms — gross, operating and net — and businesses get into trouble by managing the wrong one. This calculator works out profit and profit margin from revenue and cost so you can see both the currency amount and the percentage that makes it comparable across periods.
Inputs
Result
400
Margin 33.33% · Markup 50%
How the profit calculator works
Profit = revenue − cost. Profit margin = profit ÷ revenue × 100.
Gross profit uses only direct costs; operating profit subtracts overheads; net profit subtracts interest and tax as well.
Margin, not absolute profit, is what you track over time — growing revenue with a falling margin is often a warning rather than a win.
Worked example: a quarter of trading
- Revenue: 480,000. Direct costs: 288,000. Gross profit: 192,000, a 40% gross margin.
- Overheads: 120,000. Operating profit: 72,000, a 15% operating margin.
- Interest 8,000 and tax 16,000. Net profit: 48,000, a 10% net margin.
- Next quarter revenue grows to 560,000 but discounting pushes direct costs to 358,000.
- Gross margin falls to 36%, and despite 80,000 more revenue, gross profit rises only 10,000.
Common mistakes to avoid
Confusing profit with cash
Profitable businesses fail on cash flow when receivables stretch and inventory absorbs money. Track both statements.
Leaving owner's compensation out
Unpaid founder time makes margins look far healthier than they are and hides an unsustainable model.
Comparing margins across industries
A 5% net margin is strong in grocery and alarming in software. Compare only against your own history and direct peers.
Frequently asked questions
What is a good profit margin?
It depends entirely on the sector. Broadly, 10% net is respectable for a small business and 20% is strong, but services and software run much higher than retail.
How do I increase margin without raising prices?
Reduce direct cost through supplier negotiation, cut returns and waste, shift mix toward high-margin lines, and remove overheads that do not drive revenue.
What is the difference between profit and markup?
Profit is an amount; markup is that amount expressed against cost. Margin expresses it against revenue.
Should I include depreciation?
Yes, in operating profit — it reflects the real consumption of assets, even though no cash leaves in that period.
Why did profit fall while sales rose?
Almost always discounting, a shift toward low-margin products, or overheads growing faster than revenue. Check gross margin first.
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