Calculate gross, operating, and net profit margins from cost and revenue with breakeven analysis.
Type your total revenue or selling price per unit.
Type the cost of goods sold or total expenses.
See gross margin, net margin, and markup percentage calculated.
Enter your revenue, cost of goods sold, and operating expenses, and this tool returns the three margins that standard profit reporting uses: gross, operating, and net, each shown as a percentage of revenue. A breakeven section goes further, using fixed costs and per-unit price and cost to find the volume at which a business stops losing money. The result people most often misread is the margin itself: margin is profit divided by revenue, while profit divided by cost is a different, always-larger number called markup. Swapping the two is how optimistic forecasts quietly go wrong.
A concrete input and expected output from the current implementation.
Input
Revenue: $10,000. Cost of goods sold: $6,000. Operating expenses: $2,000. Interest and taxes: $400.
Expected output
Gross profit $4,000 at 40% margin. Operating profit $2,000 at 20% margin. Net profit $1,600 at 16% margin.
Each margin divides the profit at that level by the same revenue of $10,000: $4,000 / $10,000 = 40%, $2,000 / $10,000 = 20%, and $1,600 / $10,000 = 16%. Margin always uses revenue as the denominator, so each percentage shows the share of every revenue dollar that survives each layer of cost.
Each of the three margins divides a profit figure by total revenue, never by cost. Gross margin is revenue minus cost of goods sold, divided by revenue; operating margin further subtracts selling and administrative expenses; net margin subtracts everything remaining, including interest and taxes. With the denominator fixed, the results always fall in order: net margin cannot exceed operating margin, which cannot exceed gross margin.
The breakeven calculation works from per-unit numbers: contribution margin is price minus variable cost per unit, and breakeven volume is fixed costs divided by that contribution margin. With fixed costs of $2,000, a price of $50, and variable cost of $30 per unit, breakeven is $2,000 / ($50 - $30) = 100 units. Below that volume, sales lose money; above it, each unit sold adds the full contribution margin to profit.
No. A margin is a ratio and says nothing about total profit: a 60% margin on $10,000 of revenue earns less than a 20% margin on $100,000, and trading margin for volume is a legitimate strategy. Margins are most informative compared over time or against businesses with a similar cost structure, not judged in isolation.
There is no universal target. A healthy margin in one industry can be a failure in another, so published averages only mean something within your own sector and business model. Use the tool to track whether your own margins are steady or slipping, and compare against industry data from a source you trust rather than a round number.
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