Feed in revenue, COGS, operating expenses and the odds and ends (interest, tax) once, and you get three margins back: gross, operating and net. Run the calculator's own defaults, $250,000 in revenue, and those three numbers land at 60%, 36% and 30%. Same business, three different answers, depending on where you stop counting costs.
This is a planning estimate. It is not tax or financial advice.
Gross profit is revenue minus cost of goods sold. Operating profit takes out overhead like salaries and rent. Net profit subtracts interest, taxes, and anything else still standing. Each margin is that profit number divided by revenue, expressed as a percentage.
Margin expectations vary enormously by business type. Two examples from opposite ends of the spectrum:
| Business type | Typical net margin |
|---|---|
| Grocery retail | 1 to 3% |
| Software / SaaS | 20 to 30% |
These are reference ranges, not a guarantee. A grocery chain running a 1% net margin isn't struggling; a software company at the same number probably is.
Run the defaults already loaded above through all three margins:
Sixty cents of every revenue dollar survives COGS. Thirty cents survives everything else.
A margin percentage means more sitting next to another one. Run the same revenue through the Gross Margin Calculator to isolate profit before overhead, or use the Business Valuation Calculator if you're pricing the business itself rather than this quarter's results.
Gross margin stops at cost of goods sold. Net margin keeps subtracting overhead, operating costs, interest and tax until you arrive at what actually belongs to the business. A company can have a 60% gross margin and a 3% net margin, which is a different kind of problem.
It depends heavily on the industry. Grocery retail runs on 1-3% net. Software can hit 20-30%. The most useful benchmark is your own margin from the same quarter last year.
Cost of goods sold covers the direct costs tied to making or delivering your product: materials, direct labor, manufacturing costs. It does not include rent, salaries for non-production staff, or marketing.
No. It's an estimate for planning.
