One set of inputs, all three margins. This profit margin calculator walks revenue down through cost of goods, operating expenses, and interest & tax — showing where the money actually goes.
The formulas
Gross margin = (Revenue − COGS) ÷ Revenue — how much survives making the product. Operating margin = (Revenue − COGS − OpEx) ÷ Revenue — how much survives running the company. Net margin = what's left after everything, including interest and tax. Each level answers a different question, which is why analysts always quote all three.
Worked example
Revenue $1,000K, COGS $400K, operating expenses $300K, interest & tax $80K: gross margin 60%, operating margin 30%, net margin 22%. A retailer with these numbers is exceptional; a software company with 60% gross margin is below par — context is everything.
How to read the result
Compare against your own industry, not a universal “good”: software runs 70-85% gross margins, grocery retail 20-30%, restaurants 60-70% gross but painfully thin net. A falling gross margin signals pricing or cost trouble; a falling net margin with stable gross usually means overhead creep. For pricing decisions the markup calculator converts a target margin into a selling price.
What is a good profit margin?
Entirely industry-dependent: 10% net is solid for retail, weak for software. Compare against direct competitors, not a universal number.
What's the difference between margin and markup?
Margin is profit as a share of price; markup is profit as a share of cost. A 50% markup equals a 33% margin — mixing them up misprices products.
What goes into COGS?
Direct costs of producing what you sell: materials, manufacturing, direct labour, payment processing for digital goods. Rent and marketing belong in operating expenses.
Why is my net margin negative?
Your combined costs exceed revenue. The three-level breakdown shows where: weak gross margin is a pricing/product-cost problem, weak operating margin is an overhead problem.