Profit Margin Calculator
Calculate gross, net, and operating profit margins for your business

Total sales revenue

Direct costs to produce goods/services

Rent, salaries, marketing, etc.

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Accounting Software for Small Business

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Understanding Profit Margins

Profit margins are essential metrics that show how much profit your business generates from its revenue. They help you understand your business's financial health, compare performance against competitors, and make informed pricing and cost decisions.

Types of Profit Margins

  • Gross Profit Margin: Shows profitability after direct costs
  • Operating Profit Margin: Includes operating expenses
  • Net Profit Margin: The bottom line after all expenses

How to Improve Profit Margins

Improving profit margins requires a strategic approach focusing on increasing revenue, reducing costs, or both. Consider optimizing pricing, negotiating better supplier terms, improving operational efficiency, and focusing on higher-margin products or services.