Profit Margin Calculator 2026

Compute gross, operating, and net margin from a one-page income statement. Standard profitability metrics for any business.

Revenue

₹

Net sales — total invoiced amount minus returns and discounts.

₹0₹100.00 Cr

Cost of Goods Sold (COGS)

₹

Raw materials, direct labour, freight-in. Costs that go directly into producing goods sold.

₹0₹100.00 Cr

Operating expenses (OpEx)

₹

Salaries, rent, utilities, marketing, depreciation.

₹0₹50.00 Cr

Other income

₹

Non-operating income: interest earned, asset sale gains, etc.

₹0₹10.00 Cr

Interest expense

₹

Loan interest paid during the period.

₹0₹10.00 Cr

Tax

₹

Income tax paid for the period.

₹0₹10.00 Cr

Net margin: 15%; Net profit of ₹15.00 L on ₹1.00 Cr revenue.

Gross margin: 40%
Operating margin: 20%

Where the revenue goes

Cost of Goods Sold (COGS): ₹60.00 L
Operating expenses (OpEx): ₹20.00 L
Interest expense: ₹2.00 L
Tax: ₹4.00 L
Net profit: ₹15.00 L

Income statement breakdown

Line item	Amount	% of revenue
Revenue	₹1.00 Cr	100.00%
− Cost of Goods Sold (COGS)	(₹60.00 L)	60.00%
Gross profit	₹40.00 L	40%
− Operating expenses (OpEx)	(₹20.00 L)	20.00%
Operating profit (EBIT)	₹20.00 L	20%
+ Other income	₹1.00 L	1.00%
− Interest expense	(₹2.00 L)	2.00%
− Tax	(₹4.00 L)	4.00%
Net profit	₹15.00 L	15%

Margin formulas, with your numbers

Standard Formula

G = R − C Gross margin = G / R × 100 Net margin = N / R × 100

Live Calculation (Plugging Your Values)

Revenue (R):₹1,00,00,000

Cost of goods sold (C):₹60,00,000

Gross profit (G):₹40,00,000

Net profit (N):₹15,00,000

Substituted Equation:

G = ₹1,00,00,000 − ₹60,00,000 = ₹40,00,000 ₹40,00,000 / ₹1,00,00,000 × 100 = 40% ₹15,00,000 / ₹1,00,00,000 × 100 = 15%

Net margin:15%

Net profit N is gross profit less operating expenses, plus other income, less interest and tax. Gross margin counts only the direct cost of what you sell; operating margin then removes running costs, and net margin removes interest and tax as well. The gap between them is where the money actually goes.

About Profit Margin Calculator

Profit margin is the share of each rupee of sales that a business keeps as profit. Because it is a percentage of revenue, it lets you compare a small business with a large one, or this year with last year, on the same scale.

This calculator builds a short income statement from the figures you enter and reports three margins on it: gross margin after the cost of goods sold, operating margin after running costs as well, and net margin after other income, interest and tax. It uses your figures exactly as entered for whatever period they cover. It does not work out the tax figure for you, and it does not say whether a margin is good for your trade; for that, compare with businesses like yours.

How it Works

The calculator takes six figures, all for the same period:

Revenue: net sales for the period. Every margin on the page is divided by this figure.
Cost of Goods Sold (COGS): the direct cost of what you sold. Revenue less COGS is gross profit.
Operating expenses (OpEx): the costs of running the business, such as salaries, rent and marketing. Gross profit less these is operating profit.
Other income, interest expense and tax: income from outside the main business is added, then loan interest and tax are taken off, to reach net profit.

Why it helps

See where each rupee goes: the statement and the chart show how much of revenue goes to direct costs, running costs, interest and tax, and how much is left.
Find the layer that is slipping: if gross margin holds while operating margin falls, the pressure is coming from overheads rather than from pricing or input costs.
Compare like with like: run last year and this year, or two product lines, through the same steps and set the margins side by side.
Share the exact figures: the link from the share button carries your inputs, so a partner or accountant opens the same statement.

References

How these numbers are checked →

Profit Margin FAQs

What is the difference between gross and net profit margin?

Gross Profit Margin = (Revenue − COGS) / Revenue × 100, measuring production efficiency. Net Profit Margin = Net Profit / Revenue × 100, after all operating expenses, interest and tax. Gross tells you whether the product works; net tells you whether the business does.

How is markup different from profit margin?

Markup = Profit / Cost × 100, measured against what you paid. Margin = Profit / Revenue × 100, measured against what you charged. A 50% markup is only a 33% margin — confusing the two is the most common pricing error in small businesses.

How do I price a product to reach a target margin?

Divide cost by (1 − target margin), do not add the margin to cost. For a 30% margin on an item costing Rs 700: 700 / (1 − 0.30) = Rs 1,000, giving Rs 300 of profit on Rs 1,000 of revenue. Adding 30% to cost gives Rs 910, which works out to only a 23% margin — a shortfall of Rs 90 on every unit. On 5,000 units a year that single pricing mistake costs Rs 4.5 lakh of profit.

Does profit margin include GST?

No. Calculate margin on GST-exclusive revenue and GST-exclusive cost. GST collected is held on behalf of the government, and GST paid on purchases returns as input tax credit, so neither is yours. Selling at Rs 11,800 including 18% GST means revenue of Rs 10,000. Treating the Rs 11,800 as revenue inflates the margin and, worse, makes a loss-making product look profitable.

What is operating margin and why do lenders look at it?

Operating Margin = Operating Profit (EBIT) / Revenue x 100 — profit after all operating costs but before interest and tax. Banks care because it shows whether the business itself earns money, independent of how it is financed. Net margin can be flattered by a tax benefit or dragged down by a heavy loan; operating margin cannot. It is also what drives DSCR and the EBITDA multiple in a valuation.

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