Use the direct cost tied to each sale — not overhead like rent or admin salaries.
Variable fees (payment, marketplace)· $6,000.00▾
% of net rev
$
%
$
$
Operating expenses (overhead)· $20,000.00▾
$
$
$
$
$
$
$
$
$
Overhead that is not tied to one sale: rent, admin salaries, software, insurance, utilities.
Finance, tax & GST/VAT· 25% est. tax▾
$
%
A planning input, not a tax filing calculation.
Business type & number format· General small business▾
Margins vary widely by business model, pricing power, location, volume, and cost structure — the bands shown are general planning ranges, not standards.
Results · monthly
Moderate margin
Formula verified 14 June 2026
Net profit
$13,500.00
After every selected cost.
Net margin
13.5%
Net profit ÷ net revenue.
Gross profit
$45,000.00
Net revenue − direct costs.
Gross margin
45%
After direct cost / COGS only.
Contribution profit
$39,000.00
After variable fees too.
Contribution margin
39%
What each sale contributes to fixed costs.
Operating profit
$19,000.00
After operating expenses.
Operating margin
19%
Operating profit ÷ net revenue.
Markup
81.8%
Profit ÷ cost — not the same as margin.
Cost-to-revenue
55%
Direct costs as a share of net revenue.
Net profit per order
$13.50
Across 1,000 orders.
Break-even orders
538.5
Overhead + interest ÷ contribution per unit.
General small business: your net margin of 13.5% sits in the strong band — for this business type.
General planning ranges only — margins vary widely by business model, pricing power, location, volume, and cost structure. A broad default band — pick a closer business type for a more useful comparison.Shipping, payment fees, ads, and returns usually separate gross from net margin.Platform commissions and fulfilment fees compress seller margins.High-volume, thin-net-margin model; rent and staff dominate below the gross line.Food cost is usually 28–38% of menu price; labour and rent take most of the rest.Thin per-unit margins offset by volume; logistics costs matter.Materials, direct labour, and machine overhead drive the gross line.Bid-to-bid variance is large; change orders and rework decide the net line.Margins depend on utilisation and whether owner time is costed.Scope creep and unbilled revisions are the classic margin leaks.High margin on paper — but only if your own time is priced in.High gross margins; net depends on acquisition spend and growth stage.Near-zero marginal cost; platform fees and ad spend decide the net.Travel time, callbacks, and seasonality affect realised margins.Churn and acquisition cost decide whether gross margin survives to net.
The 17-sheet workbook is generated from your current inputs and includes live formulas, scenarios, sensitivity, SKU comparison, and assumptions.
Planning estimate only — not accounting, tax, or valuation advice.
What your margin is telling you
Practical reading of the current numbers — planning signals, not verdicts.
Pricing power
Gross margin is 45%. There is room to operate, but fees and overhead will decide how much survives to net profit.
Cost pressure
Direct cost consumes 55% of net revenue. Supplier cost, materials, direct labour, or landed cost is the first line to review.
Overhead pressure
Operating expenses reduce the margin by 26.0 percentage points. Net margin may improve more from overhead control than from small price changes.
Fee leakage
Payment, platform, marketplace, and ad fees consume 6% of net revenue. These scale with every sale, so they cap margin even at higher volume.
Discount & refund leakage
Discounts, refunds, and chargebacks remove 4.8% of gross revenue before any cost is paid. High return rates make a healthy gross margin look weak at the net level.
Break-even safety
Current volume is 1.9× break-even — a reasonable buffer before the model turns loss-making.
Tax & interest drag
Interest (1% of revenue) and estimated tax (4.5%) separate operating profit from net profit. Check both against actual accounting records.
Cash-flow caution
Profit margin does not equal cash in hand. Inventory timing, receivables, loan principal payments, tax timing, and working capital can make cash flow look very different from margin.
Profit breakdown chart
How revenue falls to net profit, step by step. Zero-value steps are hidden.
Gross revenue
$105,000.00 · 105% of net
− Discounts
−$3,000.00 · 3% of net
− Refunds / returns
−$2,000.00 · 2% of net
Net revenue
$100,000.00
− Direct costs / COGS
−$55,000.00 · 55% of net
Gross profit
$45,000.00 · 45% of net
− Variable fees (payment, platform, ads)
−$6,000.00 · 6% of net
Contribution profit
$39,000.00 · 39% of net
− Operating expenses
−$20,000.00 · 20% of net
Operating profit
$19,000.00 · 19% of net
− Interest expense
−$1,000.00 · 1% of net
Pre-tax profit
$18,000.00 · 18% of net
− Estimated tax
−$4,500.00 · 4.5% of net
Net profit
$13,500.00 · 13.5% of net
Revenue falls from $105,000.00 to $13,500.00 net profit. The largest leak is direct costs / cogs at $55,000.00.
Show waterfall as a table
Target price and target margin
The selling price a target margin requires — Price = Cost ÷ (1 − margin).
%
$
Required selling price
$91.67
On a direct cost per unit of $55.00.
Profit at that price
$36.67
Confirms the 40% target margin.
Gap vs current price
−$8.33
8.3% decrease needed.
Max cost at current price
$60.00
The most a unit can cost and still hit the margin.
Discount impact
A discount cuts margin faster than price — this shows the extra volume needed to keep the same total profit.
$
$
%
$
New price
$90.00
Was $100.00.
New profit per order
$30.00
Was $40.00.
New margin
33.3%
Was 40%.
Profit lost at same volume
$1,000.00
$10.00 per order × 100.
Orders needed for same profit
133.3
Extra 33.3 orders (+33.3%).
Revenue required at new price
$12,000.00
Required units × discounted price.
Break-even units and revenue
The volume where contribution profit exactly covers fixed costs.
$
$
$
$
Break-even orders
250
Contribution $40.00 per order (40%).
Break-even revenue
$25,000.00
Fixed costs ÷ contribution margin.
Scenario analysis
Base, conservative, optimistic, and single-pressure cases — plus a custom scenario you control.
Scenario analysis table
Scenario
Net revenue
Gross profit
Contribution
Operating profit
Net profit
Gross M
Net M
Status
Base case
$100,000.00
$45,000.00
$39,000.00
$19,000.00
$13,500.00
45%
13.5%
OK
Conservative▼
$89,500.00
$29,000.00
$22,700.00
$1,700.00
$525.00
32.4%
0.6%
Below threshold
Optimistic▲
$110,500.00
$58,250.00
$52,550.00
$32,550.00
$23,662.50
52.7%
21.4%
OK
Discount 10%
$89,500.00
$34,500.00
$28,500.00
$8,500.00
$5,625.00
38.5%
6.3%
Below threshold
Cost +15%
$100,000.00
$36,750.00
$30,750.00
$10,750.00
$7,312.50
36.8%
7.3%
Below threshold
Fees +15%
$100,000.00
$45,000.00
$38,100.00
$18,100.00
$12,825.00
45%
12.8%
OK
Refunds +10%
$99,500.00
$44,500.00
$38,500.00
$18,500.00
$13,125.00
44.7%
13.2%
OK
Custom
$100,000.00
$45,000.00
$39,000.00
$19,000.00
$13,500.00
45%
13.5%
OK
Optimistic performs best at $23,662.50 net profit (21.4% margin); Conservative performs worst at $525.00 (0.6% margin) — a swing of $23,137.50 across the scenarios modelled.
Conservative: revenue −10%, cost +10%, fees +5%, opex +5%. Optimistic: revenue +10%, cost −5%, fees −5%. Single-pressure cases isolate one risk each. Scenarios are simplified percentage shifts, not forecasts.
Price & cost sensitivity
Contribution margin (and profit per order) as selling price and variable cost move ±20%. The centre cell is your current position. This grid isolates price vs variable cost — overhead, interest, and tax are not in it.
Sensitivity of margin to price and cost changes
Price ↓ / Cost →
-20%
-10%
0%
+10%
+20%
-20%
39% $31.20
31.4% $25.10
23.8% $19.00
16.1% $12.90
8.5% $6.80
-10%
45.8% $41.20
39% $35.10
32.2% $29.00
25.4% $22.90
18.7% $16.80
0%
51.2% $51.20
45.1% $45.10
39% $39.00
32.9% $32.90
26.8% $26.80
+10%
55.6% $61.20
50.1% $55.10
44.5% $49.00
39% $42.90
33.5% $36.80
+20%
59.3% $71.20
54.3% $65.10
49.2% $59.00
44.1% $52.90
39% $46.80
Base: price $100.00, variable cost $61.00 per order. Red = loss-making · amber = contribution margin under 10% · green = above 20%. Across this grid, margin ranges from 8.5% (price -20%, cost +20%) up to 59.3% (price +20%, cost -20%).
SKU and product margin comparison
Compare up to 20 products side by side — find the loss-makers and the stars. Per-unit contribution view; fixed overhead is not allocated per SKU.
SKU comparison preview
SKU
Price
Cost
Revenue
Profit/unit
Total profit
Margin
Status
Core product
$49.00
$18.00
$15,680.00
$17.00
$5,440.00
34.7%
Healthy
Premium bundle
$89.00
$31.00
$12,460.00
$38.00
$5,320.00
42.7%
Strong
Accessory
$15.00
$4.00
$7,650.00
$4.30
$2,193.00
28.7%
Healthy
Clearance line
$22.00
$14.00
$2,090.00
−$1.80
−$171.00
-8.2%
Loss-making
Total profit (all SKUs)
$12,782.00
Revenue $37,880.00 · weighted margin 33.7%.
Highest total profit
Core product
Highest revenue: Core product.
Highest margin
Premium bundle
Lowest margin: Clearance line.
Loss-making SKUs
1
Selling these harder makes things worse — re-price or re-cost first.
Monthly, quarterly and annual planning
The current result scaled across periods — margins stay constant; the money columns scale.
Planning table by period
Period
Net revenue
Direct costs
Gross profit
Contribution
Operating profit
Est. tax
Net profit
Net margin
Current month
$100,000.00
$55,000.00
$45,000.00
$39,000.00
$19,000.00
$4,500.00
$13,500.00
13.5%
Quarterly equivalent
$300,000.00
$165,000.00
$135,000.00
$117,000.00
$57,000.00
$13,500.00
$40,500.00
13.5%
Annual equivalent
$1,200,000.00
$660,000.00
$540,000.00
$468,000.00
$228,000.00
$54,000.00
$162,000.00
13.5%
What this tool shows
Built for product sellers, ecommerce and marketplace brands, freelancers, agencies, SaaS founders, and SMEs.
Gross, contribution, operating, and net margin from one set of inputs
Margin vs markup — and safe conversion between the two
Target selling price, maximum affordable cost, and price rounding
Discount impact with the extra units needed to keep the same profit
Break-even units and revenue, plus volume for a target profit
Ecommerce, service/project, and SaaS modes with their own diagnostics
Scenario analysis, a price/cost sensitivity grid, and SKU comparison
A 17-sheet Excel workbook generated from your exact inputs
Verify against your own books — full formula shown.
Updated 14 June 2026 · Works in any currency
Profit margin is profit divided by revenue; markup is the same profit divided by cost — and they are never the same number. Gross margin uses direct costs only, contribution margin adds variable fees, operating margin adds overhead, and net margin includes interest and estimated tax. To price for a target margin, divide cost by one minus the margin: a 60 cost at a 40% target needs 60 ÷ 0.60 = 100, not 60 × 1.40 = 84.
At a glance
Formula shown
Margin % = Profit ÷ Revenue × 100 — markup divides the same profit by cost.
Scenario support
Six modes with target price, discount, break-even, sensitivity, and SKU comparison.
Workbook export
17-sheet Excel (XLSX) export
Educational estimate
Planning support from the values you enter — not professional advice.
The same order is a 55% margin and a 17.9% one
Selling price ₹2,000, product cost ₹900, packaging ₹50, shipping ₹120, payment fee 2%, marketplace fee 10%, ad cost ₹250, return allowance 5% (full loss). Product-cost-only, the sale looks like a 55% margin (2,000 − 900 = 1,100). But net order revenue after the return allowance is ₹1,900; direct costs are 1,070; fees and ads add 40 + 200 + 250 = 490 — leaving a contribution profit of ₹340 per order, a 17.9% contribution margin.
Fees, ads, shipping, and returns consumed the difference between the product-cost view and the real number. This is why the calculator separates gross margin (direct cost only) from contribution margin (every cost that scales with the sale) instead of reporting one blended figure.
The result panel walks revenue down that same waterfall: gross margin after direct costs, contribution margin after the fees and shipping that scale with each sale, operating margin after overhead, and net margin after interest and estimated tax. Reading all four together — not just the gross line — is what shows where the money actually goes. Enter revenue and costs once and the panel reports the profit amount alongside all four percentages, so you never need separate profit and margin calculators.
The diagnosis cards underneath point at pricing power, cost pressure, fee leakage, refund risk, and break-even safety, and the markup figure sits next to margin so the two are never confused. Switch modes for per-order ecommerce economics, service-quote hourly profit, or SaaS unit economics, then use the target price, discount, break-even, scenario, and sensitivity tools to stress-test the number before you download the workbook.
What this does not do is keep books. There is no depreciation, amortisation, inventory valuation, accrual timing, working capital, or loan-principal modelling behind those four lines — they are arithmetic on the figures you type, not a set of accounts.
Profit margin formulas
Margin
Margin % = Profit ÷ Revenue × 100
Denominator is REVENUE.
Markup
Markup % = Profit ÷ Cost × 100
Denominator is COST — always larger than margin.
Target price from margin
Price = Cost ÷ (1 − Margin)
Division, not multiplication. 100% margin is impossible.
Longhand, the first card is: subtract costs from revenue to get profit, then divide profit by revenue and multiply by 100. On $10,000 of revenue against $6,000 of cost, profit is $4,000 and the margin is 4,000 ÷ 10,000 = 40%.
A 30% markup on a $60 cost is a 23.1% margin
Margin divides profit by the selling price; markup divides the same profit by the cost. A $40 profit on a $100 sale with a $60 cost is a 40% margin but a 66.7% markup, and the two are never the same number except at zero. Pricing from the wrong one is the most expensive arithmetic mistake in small-business pricing.
Target margin converted to the markup on cost that produces it, with the resulting selling price on a $60 cost
Target margin
Markup required on cost
Price on a $60 cost
10%
11.1%
$66.67
15%
17.6%
$70.59
20%
25%
$75.00
25%
33.3%
$80.00
30%
42.9%
$85.71
40%
66.7%
$100.00
50%
100%
$120.00
60%
150%
$150.00
70%
233.3%
$200.00
A 30% markup on a $60 cost is a $78 price and a 23.1% margin, not a 30% one — and that seven-point gap is pure lost profit, repeated on every unit.
Why 4% net is normal in retail and weak in consulting
These are planning bands for orientation, not audited industry statistics: soft planning ranges, never guarantees, and that is the honest limitation of every row below. Scale, location, pricing power, and accounting treatment move real margins well outside them. As a generic first cut, under 5% net is very thin, 5–10% thin, 10–20% moderate, 20–35% healthy, and above 35% high — but a 4% net margin sits inside the normal band for a retail store and below the weak line for a consultancy. That is the whole reason the business-type selector exists: treat the bands as orientation, not verdicts.
Fifteen business types with their typical gross margin range and the weak, normal, and strong net margin bands the calculator compares against
Business type
Typical gross margin
Weak below
Normal band
Strong above
General small business
30–60%
0%
5–10%
10%
Ecommerce / D2C
40–70%
0%
5–10%
10%
Marketplace seller
25–50%
0%
4–8%
8%
Retail store
25–50%
0%
2–5%
5%
Restaurant / food
55–70%
0%
3–6%
6%
Wholesale / distribution
15–30%
0%
2–5%
5%
Manufacturing
25–45%
0%
4–8%
8%
Construction / trades
15–35%
0%
3–7%
7%
Consulting
50–80%
5%
10–20%
20%
Agency
40–60%
0%
5–12%
12%
Freelancer
60–90%
5%
15–30%
30%
SaaS / software
65–85%
-10%
0–10%
10%
Digital products
80–95%
10%
25–40%
40%
Local service
40–70%
0%
5–10%
10%
Subscription business
50–80%
-5%
0–10%
10%
Restaurants, bars, and other food-and-beverage sellers get their own row rather than the generic default, because their band is built around typical food-cost ratios — food cost is usually 28–38% of menu price, and labour and rent take most of what is left.
The $100 order whose 31.6% gross margin clears $13.35
Gross margin and the margin that survives a marketplace are usually fifteen to twenty points apart. One $100 order, taken line by line:
Line-by-line receipt for a single $100 marketplace order with a $55 product cost, from selling price down to net profit and net margin
Line item
Per order
Selling price
$100.00
Returns allowance (4% returned, half the value lost)
−$2.00
Net order revenue
$98.00
Product cost
−$55.00
Packaging
−$2.00
Inbound freight
−$3.00
Outbound shipping
−$7.00
Gross profit — 31.6% gross margin
$31.00
Payment gateway, 2.9% + $0.30
−$3.20
Marketplace commission, 10%
−$10.00
Platform subscription per order
−$0.40
Apps and tools per order
−$0.25
Advertising per order
−$2.00
Return shipping on refused orders
−$0.50
Contribution profit — 14.9% contribution margin
$14.65
Fixed overhead, $1,300 across 1,000 orders
−$1.30
Net profit per order
$13.35
Net margin
13.6%
To run the same receipt against your own Amazon or eBay listings, add the platform’s referral, fulfillment, and payment-processing fees to your total costs, then select "Marketplace seller" under business type for a benchmark band built around typical platform-fee compression. For a deeper breakdown of ecommerce-specific costs, use the Ecommerce Profit Calculator listed below.
What each of the six modes assumes before it answers
The mode switch above the inputs changes which costs the calculator asks for and which diagnostics it returns.
The six calculator modes, the situation each one is for, and what each adds to the simple margin view
Mode
Use it when
What it adds over Simple
Simple Margin
One selling price against one cost
Baseline margin, markup and profit
Advanced Profit
Overhead, interest and tax sit below gross
Contribution, operating and net margin lines
Ecommerce / Marketplace
Every sale passes through platform fees
Per-order fees, returns and break-even orders
Service / Project
You quote projects or bill hours
Hours, buffer and owner time as cost
SaaS / Subscription
Revenue recurs and customers churn
MRR, churn, LTV and CAC payback
Solve For (Reverse)
You know the margin you need
Solves for price, cost or volume
Whichever mode is selected, five conventions sit underneath the number it returns:
Gross margin uses direct costs/COGS; contribution margin adds variable fees; operating margin adds operating expenses; net margin adds interest and estimated tax — all divided by net revenue.
Estimated tax = max(0, pre-tax profit) × your rate, or a custom amount — a planning simplification, not a jurisdiction-specific computation.
When "GST/VAT included in price" is selected, the tax portion (gross − gross ÷ (1 + rate)) is carved out of revenue as a pass-through, so collected tax never inflates margin.
Break-even assumes constant price, variable cost, and genuinely fixed costs; scenarios apply simple percentage shifts; annualised rows assume the period repeats.
SaaS LTV and CAC payback use a steady-state churn shortcut (new customers ≈ customers × churn), not cohort analysis.
That third convention is the one people ask about most: tax collected from customers is generally not revenue at all, but a pass-through liability owed to the tax authority. What this cannot do is settle compliance — income tax, GST/VAT filing, and sales-tax nexus rules are out of scope here.
A 4% trading spread that reaches the bank as 1.05%
The spread a trader quotes and the margin that reaches the bank are separated by six or seven lines that never appear on the sales invoice. A 100-unit consignment sold on a 4% gross spread:
A commodity consignment walked down from a 4% quoted gross spread to the 1.05% margin left after mandi fee, sacks, handling labour, freight, transit shortage, and cash-credit interest
Line
% of turnover
Running margin
Gross trading spread
+4.00%
4.00%
Market committee (mandi) fee
−0.60%
3.40%
Gunny bags (jute sacks)
−0.30%
3.10%
Hamali (loading and unloading labour)
−0.20%
2.90%
Freight
−0.60%
2.30%
Transit weight shortage
−0.15%
2.15%
Cash-credit interest, 10% a year over 40 days of stock and receivables
−1.10%
1.05%
These rates differ by commodity, state and season — the point is the shape of the walk-down, not the specific percentages. The interest line is also where margin stops being cash: profit margin does not equal cash flow, because inventory, receivables, tax timing, and debt payments move money independently of any percentage on this page.
The 2–4% lost in drying belongs in cost, not a footnote
The margin on a processed commodity is not the margin on the main product. Milling paddy yields roughly 65–68% head rice by weight, plus bran at about 7–8%, husk at about 20%, and broken rice — and bran and broken rice are sold, not discarded.
Charging the whole paddy cost against rice revenue alone understates the real margin badly; ignoring the 2–4% of weight lost when paddy bought at 16–18% moisture is dried overstates it. The rule generalises to any processing business: allocate cost of goods across every saleable output in proportion to realisable value, and put yield loss inside cost rather than in a footnote.
Related calculators
This page includes mini discount and break-even modules because they directly affect margin — for deeper, dedicated analysis use:
MarkupPrice from cost across nine modes — markup, target margin, reverse cost ceilings, and ecommerce landed cost after fees.
Break-EvenFind units and revenue break-even, contribution margin, target profit, and margin of safety, with sensitivity tables and a chart.
Ecommerce ProfitSee net profit per order after product costs, fees, shipping, ads, and returns, with break-even price and ROAS.
Break-Even ROASWork out break-even and target ROAS from your real margins, plus max CAC, break-even MER, and ad budgets.
Price Elasticity of DemandMeasure price elasticity of demand (midpoint and simple PED) and test how a price change affects revenue and profit.
LTV:CACCalculate CAC, discounted LTV, the LTV:CAC ratio, and CAC payback, with channel-by-channel decisions and scenarios.
VAT/GSTAdd or remove VAT, GST, or HST from a price, solve tax-inclusive and tax-exclusive values, and build mixed-rate invoices.
Sales TaxAdd US sales tax to a price or back it out of a receipt total, with combined state + average local rate presets for all 50 states.
Global Import DutyEstimate customs duty, tax, and total landed cost for any country, or India’s Basic Customs Duty, Social Welfare Surcharge, and IGST cascade.
ROISimple, date-based, and net ROI with annualised ROI (CAGR), a reverse target solver, and a two-investment comparison.
Every figure on this page is arithmetic on the numbers you type. Nothing is fetched live: no tax rates, no platform fees, no exchange rates, no industry data. The sources below cover the accounting structure the waterfall follows (which costs sit above gross profit and which sit below it), and the tax rules behind the option that carves VAT or GST out of a tax-inclusive price.
One thing has no authority behind it, and we will not pretend otherwise: the 15 business-type benchmark bands are our own planning ranges, assembled for orientation. No government, regulator or standards body publishes a "correct" profit margin for a restaurant or a marketplace seller. The closest thing to a measured figure is the Census Bureau survey below, which reports what US retailers actually achieved rather than what they ought to. Treat every band on this page as a conversation starter, not a verdict.
This profit margin calculator and its XLSX workbook are for education and planning only. They are not financial, accounting, tax, legal, investment, lending, or business advice, and they are not accounting software. Estimated tax is a simplified planning input, not a filing calculation; GST/VAT treatment depends on jurisdiction and accounting method. Actual profit and cash flow can differ because of inventory timing, refunds, chargebacks, payment delays, working capital, loan payments, depreciation, and accounting method. Verify results with your actual books and a qualified professional before making financial decisions.