Profit Calculator
Revenue is vanity; profit is sanity. This profit calculator splits your income statement into the two numbers that matter: gross profit (revenue minus the direct cost of what you sold) and net profit (what remains after all operating expenses).
Both margins are shown too, because a growing business can be profitable on paper and still bleed cash through overheads.
Enter valid values to see the results.
Formula
COGS includes only costs that scale with each sale (materials, production, direct labour). Operating expenses are the fixed costs of running the business: rent, salaries, marketing, software. Net margin = net profit ÷ revenue.
What you need
- Revenue: total sales for the period, excluding collected sales tax or VAT.
- COGS: the direct cost of the goods or services sold in that same period.
- Operating expenses: everything else — rent, payroll, marketing, utilities, subscriptions.
Worked example
Practical tips
- Watch the gap between gross and net margin — it is your overhead burden, and it should shrink as you scale.
- Small price increases are the most powerful profit lever: they flow entirely to the bottom line.
- Review expenses quarterly; subscriptions and small recurring costs accumulate silently.
- Compare net margin to your industry before celebrating — 5% is healthy in grocery, alarming in software.
Typical net margins by industry (approximate)
| Industry | Net margin |
|---|---|
| Grocery retail | 1–3% |
| Restaurants | 3–9% |
| E-commerce | 5–15% |
| Software / SaaS | 15–30% |
Common mistakes
- 1 Confusing gross with net profit and overspending the difference.
- 2 Leaving owner salary out of expenses, flattering the net figure.
- 3 Counting tax collected on behalf of the state as revenue.
Frequently asked questions
What is the difference between gross and net profit?
Gross profit is revenue minus the direct cost of goods sold. Net profit subtracts operating expenses too. Gross shows whether your pricing works; net shows whether the whole business works.
What net margin should a small business aim for?
Commonly 7–15%, but it is industry-specific. Compare against sector benchmarks rather than an absolute number.
Can gross profit be positive while net profit is negative?
Yes — that means pricing is fine but overheads are too heavy for the current volume. Either grow revenue or cut expenses.
Is profit the same as cash flow?
No. Profit is an accounting figure; cash flow tracks actual money movement. Profitable businesses fail when cash timing goes wrong — invoice promptly and watch payment terms.