Profit Margin Calculator

A good profit margin varies by industry. Generally, a net profit margin above 10% is considered healthy for most UK small businesses. Service businesses typically achieve 20–40% gross margins, while product businesses range from 5–20%.

A net profit margin above 10% is considered good for most UK businesses. 20%+ is excellent. Below 5% leaves little buffer for unexpected costs. Compare your margin to industry benchmarks — retail typically sees 2–5%, SaaS businesses can achieve 20–30%+.

Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost price. A 50% markup does not equal a 50% margin — this is a very common pricing error. A 50% markup = 33.3% margin. Our calculator shows both.

No. Always use prices excluding VAT for profit margin calculations. VAT is collected on behalf of HMRC and is not your revenue. Use ex-VAT figures throughout.

Gross profit margin = ((Revenue − Cost of Goods Sold) ÷ Revenue) × 100. Example: you sell a product for £100, it costs £60 to make — gross margin = (£40 ÷ £100) × 100 = 40%. Our calculator does this instantly.

A business margin calculator helps you find the margin percentage on any product or service — showing how much profit divided by revenue you keep after costs. UK businesses use it to set prices, review financial health, compare product lines, and ensure each sale contributes positively to the bottom line.

Gross margin measures profit after subtracting only the direct cost of goods sold (materials, production). Net margin subtracts all costs including operating expenses, salaries, rent, and overheads. A business can have a healthy 60% gross margin but a poor 5% net margin if overheads are too high. Always track both for a full picture of financial health.

There are two levers: increase revenue or reduce costs. On the revenue side: raise prices (even 5% can dramatically improve margin percentage), upsell higher-margin products, or remove low-margin lines. On the cost side: renegotiate supplier contracts, reduce waste, and review overheads annually. Use this margin calculator to model the impact of each change before implementing it.

Operating profit margin sits between gross margin and net margin. It subtracts operating costs (salaries, rent, utilities, marketing) from gross profit but excludes interest and tax. Formula: (Revenue − COGS − Operating costs) ÷ Revenue × 100. A business with a 60% gross margin but 8% operating profit margin is spending heavily on overheads. Tracking operating profit margin separately shows whether your business model is operationally efficient before financing and tax effects are applied.

The markup formula is: (Selling Price − Cost) ÷ Cost × 100. Markup is expressed as a percentage of cost; margin is expressed as a percentage of selling price. The cost and markup relationship causes a common pricing error — a 25% markup on a £100 cost gives a £125 selling price, but the margin on that sale is only 20% (£25 ÷ £125). For businesses buying raw materials and reselling, confusing the two leads to underpricing. Track margin long term using this calculator to catch margin erosion before it compounds.

Net profit margin = (Net Profit ÷ Net Sales) × 100, where net sales is total revenue minus returns, discounts, and allowances. For example: net sales of £500,000 with net profit of £50,000 = a 10% net profit margin. Use our net profit margin calculator by entering your revenue and all costs — the result is your margin expressed as a percentage of total revenue. Tracking this monthly shows whether rising costs are quietly compressing profitability.