US BUSINESS · PRICE AND PROFITS
Gross and Net Profit Margin Calculator
A business that sells $10,000 of goods has not made $10,000 in profit. Check how direct costs and recurring overhead change the amount left over.
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Calculation results
Estimate only. A bank, employer, tax office or lender may apply additional conditions. See the scope and source below.
When and how to use this calculator
Revenue $10,000 minus $6,000 direct costs gives $4,000 gross profit (40% margin). After $2,000 overhead and $500 other costs, the model leaves $1,500 (15%).
- Match revenue and costs to the same time period, such as one month or one fiscal quarter. Do not mix cash deposits with booked sales without an accounting adjustment.
- Record direct cost of sales separately from office rent, staff overhead and other business operating expenses.
- Review both gross and net margin; a product can have a strong gross margin while the overall business still loses money.
Understand your result
A simplified period cash/operating illustration, not GAAP financial statements or tax-adjusted net income. Classify one-time, payroll and financed costs according to actual accounting rules.
Questions people ask
Is gross margin the same as markup?
No. Margin divides gross profit by selling price, whereas markup divides gross profit by cost. A 50% markup on cost is not a 50% margin.
Can net profit be negative?
Yes. If total costs exceed revenue, the model displays a loss and a negative net margin.
Does this calculate a business income-tax return?
No. Accounting treatment, depreciation, inventory, tax, interest and entity-specific rules are not determined by this tool.
Reference and calculation scope
Source material is provided for independent checking. Our calculator is not a government or bank service.