What is a good profit margin for a small business?

It varies by industry: grocery and retail often run 5–15%, trades and construction 15–30%, and professional services 40–60%. Compare against businesses in your own sector rather than an overall average.

Is this gross or net margin?

This is gross margin — revenue minus the direct cost of delivering the sale. It does not subtract rent, salaries, software, or taxes. Use the net profit calculator for the bottom line.

Why is my margin different from my markup?

They use different denominators. Margin is a share of revenue, markup is a share of cost, so markup is always the larger number.

Does it work in Canadian dollars?

Yes. Switch the country toggle in the header and every figure is shown in CAD instead of USD.

Profit Margin Calculator

Turn revenue and cost into gross margin percentage.

Profit margin is the single clearest signal of whether a sale is worth making. This calculator takes the revenue you collect on a product, service, or project and the direct cost you paid to deliver it, then shows your gross profit in dollars and your margin as a percentage of revenue.

It is built for shop owners, e-commerce sellers, trades, agencies, and freelancers on both sides of the border. Because margin is expressed as a share of revenue rather than of cost, it lets you compare a $40 item against a $40,000 contract on equal footing, and it is the number lenders, accountants, and buyers ask for first.

Use it before you publish a price list, when a supplier raises costs, or when a customer asks for a discount. If your margin drops below the level that covers overhead, you are working for free. Enter your numbers below and the result updates as you type.

Your numbers

Revenue (selling price)

Cost of goods / direct cost

Gross profit margin

35.00%

🇺🇸 US · USD

Revenue: $1,000.00
Direct cost: $650.00
Gross profit: $350.00
Equivalent markup: 53.85%

Estimates only. Results from this calculator are for general informational purposes and are not tax, legal, accounting or financial advice. Rates change and individual circumstances vary — confirm figures with the CRA, the IRS, your state or provincial authority, or a licensed professional before acting on them.

How it's calculated

Gross profit = Revenue − Direct cost
Profit margin % = (Gross profit ÷ Revenue) × 100
Markup % = (Gross profit ÷ Direct cost) × 100

Margin divides profit by revenue; markup divides the same profit by cost. That is why a 50% markup is only a 33.3% margin.

Understand the numbers

Frequently asked questions

What is a good profit margin for a small business?: It varies by industry: grocery and retail often run 5–15%, trades and construction 15–30%, and professional services 40–60%. Compare against businesses in your own sector rather than an overall average.
Is this gross or net margin?: This is gross margin — revenue minus the direct cost of delivering the sale. It does not subtract rent, salaries, software, or taxes. Use the net profit calculator for the bottom line.
Why is my margin different from my markup?: They use different denominators. Margin is a share of revenue, markup is a share of cost, so markup is always the larger number.
Does it work in Canadian dollars?: Yes. Switch the country toggle in the header and every figure is shown in CAD instead of USD.

Related calculators

Markup CalculatorSet a selling price from cost and target markup.Net Profit CalculatorRevenue minus every cost — the real bottom line.Break-Even CalculatorFind the sales volume where you stop losing money.Discount CalculatorSee the sale price and what the discount costs you.