Profit Margin Calculator

Calculate gross profit margin, net profit margin, and operating margin for your business. Enter revenue and costs to see your profitability ratios instantly.

Profit Margin Calculator

Gross margin, net margin, and operating margin in one shot

Total revenue (sales) Rs 10,00,000
Rs 10KRs 10Cr
Rs
Cost of goods sold (COGS) Rs 6,00,000

Direct costs: raw material, manufacturing, purchase cost of goods sold

Rs 0Rs 10Cr
Rs
Operating expenses Rs 2,00,000

Rent, salaries, marketing, admin — all indirect costs excluding COGS

Rs 0Rs 10Cr
Rs
Taxes and interest Rs 50,000

Income tax, interest on loans, and other below-the-line costs

Rs 0Rs 5Cr
Rs
Net profit margin
---
Net profit / Revenue
Gross margin
---
Gross profit / Revenue
Operating margin
---
EBIT / Revenue
Revenue---
COGS---
Gross profit---
Operating expenses---
Operating profit (EBIT)---
Taxes and interest---
Net profit---
Revenue breakdown
Net profit: ---
Total costs: ---

Margins vary significantly by industry. Compare against sector benchmarks for meaningful analysis.

Revenue waterfall — from sales to net profit
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ThriftRupee Insight

Most small business owners confuse markup and margin — they are NOT the same. A 25% markup on cost gives you only a 20% margin on selling price. Retailers often target a 30–40% gross margin; FMCG manufacturers work at 50–60%. Knowing your margin (not markup) is critical because margins compare your profit to your revenue — what every investor and lender cares about.

Profit Margin Calculator — Gross, Operating and Net Margin

Profit margin is the most important profitability metric for any business. It shows what percentage of revenue is retained as profit after paying costs. There are three key margins: Gross margin (after COGS only), Operating margin (after COGS and operating expenses, also called EBIT margin), and Net margin (after all costs including tax and interest).

Why profit margins matter for Indian businesses

Lenders, investors, and buyers evaluate businesses primarily on profit margins. A business with Rs 1 crore revenue but only 3% net margin earns Rs 3 lakh — barely enough to service a small loan. Banks typically want at least 8–10% net margin for business loans. Understanding your margin helps you set the right prices, cut the right costs, and communicate your business health accurately.

Frequently asked questions

What is gross profit margin?▼
Gross Profit Margin = (Revenue − Cost of Goods Sold) / Revenue × 100. It shows the percentage of revenue retained after paying direct production costs. A 40% gross margin means Rs 40 of every Rs 100 in revenue is gross profit, before operating expenses.
What is net profit margin?▼
Net Profit Margin = Net Profit / Revenue × 100, where Net Profit = Revenue − COGS − Operating Expenses − Taxes. It is the ultimate profitability metric — what percentage of revenue actually becomes profit after all costs. Industry averages: retail 2–5%, SaaS 15–25%, FMCG 8–12%.
What is a good profit margin for a small business in India?▼
It varies by industry. Trading businesses typically have 5–15% net margin. Service businesses (consulting, IT) can achieve 20–40%. Manufacturing ranges from 8–20%. E-commerce often runs at 2–8% net margin. A gross margin below 20% is a warning sign for most businesses that operating costs will eat into profits.
What is the difference between profit margin and markup?▼
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. For a product costing Rs 80 sold at Rs 100: Margin = Rs 20/Rs 100 = 20%. Markup = Rs 20/Rs 80 = 25%. They are different numbers from the same Rs 20 profit.

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