Calculate gross profit, operating profit, and net profit margin from your revenue and costs.
Gross profit is revenue minus the direct cost of goods/services sold (COGS), before accounting for operating expenses. Net profit is what remains after subtracting all operating expenses, taxes, and other costs from gross profit — it's your true bottom-line profit.
This varies enormously by industry — retail and grocery often operate on thin net margins (2-5%), while software and services businesses can see net margins of 20% or higher. Compare your margin against industry benchmarks rather than a universal target.
Profit margin is profit as a percentage of selling price (Profit ÷ Selling Price). Markup is the amount added to cost as a percentage of cost (Profit ÷ Cost). The same rupee profit produces a different percentage depending on which base you use — see our dedicated Markup Calculator to avoid confusing the two.
For an accurate picture of business profitability (especially if comparing to industry benchmarks or preparing to sell the business), yes — include a reasonable market-rate salary for any owner-operator work, even if you're not formally paying yourself that amount.
Understanding the gap between your gross and net profit margins reveals how much your operating expenses are eating into your earnings. This calculator breaks down both figures from your revenue and cost inputs.
For pricing decisions, see our Margin Calculator and Markup Calculator to set prices that hit your target profitability.
