Net Profit Margin Calculator

Enter revenue, cost of goods sold, operating expenses, interest and tax to get gross, operating and net profit margins.

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Rent, salaries, marketing, depreciation and other selling and administrative costs.
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Net profit margin
29.17 %
Gross margin
58.33 %
Operating margin
37.50 %
Gross profit
$70,000.00
Operating income
$45,000.00
Net income
$35,000.00

Estimate generated with SortedSums: https://sortedsums.com/net-profit-margin-calculator/. For informational purposes only; verify before relying on it.

Estimate only. This tool is for informational and educational purposes. Results depend on your inputs and simplifying assumptions, and are not a substitute for professional engineering, design or financial advice. Always verify with a qualified professional and applicable codes before purchasing, building or making decisions.

How it’s calculated

A multi-step income statement subtracts costs in layers. Each margin divides one of those profit lines by revenue (net sales), so you can see where the money goes.

Gross profit = Revenue − COGS Operating income = Gross profit − Operating expenses Net income = Operating income − Interest − Tax Net profit margin = Net income ÷ Revenue × 100

Example (OpenStax Principles of Finance): net income of $35,000 on net sales of $120,000 is a profit margin of 35,000 ÷ 120,000 = 29.17%, about $0.29 of profit per dollar of sales. The defaults reproduce it: 120,000 − 50,000 COGS = 70,000 gross profit (58.33%); − 25,000 operating expenses = 45,000 operating income (37.5%); − 4,000 interest − 6,000 tax = 35,000 net income.

Margins vary widely by industry; compare against similar businesses and your own past results.

Frequently asked questions

What is a good net profit margin?

It depends on the industry. Grocery retailers often run on a few percent, while software firms can exceed 20%. Compare with peers and with your own trend over time.

What is the difference between operating margin and net margin?

Operating margin stops after operating expenses, so it shows how profitable the core business is. Net margin also deducts interest and tax, so it reflects financing and tax as well.

Can the margin be negative?

Yes. If total costs exceed revenue the business made a loss and the margin is negative.

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Sources

Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.

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