Free tool · Profit margin calculator
Profit margin calculator and what your margin leaves for you.
Work out your gross margin and markup in seconds. Then take the step most calculators skip: does that margin cover the overheads and still leave enough to pay you?
Strictly private. The figures you type stay on your device. They are never sent to us or kept on our servers. The only details we hold are your name and email.
1. Margin on a sale
Use one product, one job or a whole month. The maths is the same.
Gross margin
40.0%
Profit as a share of the price
Gross profit
£40
Price minus cost
Markup
66.7%
Profit as a share of the cost
2. Does your margin pay you?
A year's numbers. The margin from step 1 is filled in for you; change it if your average is different.
Gross profit
£300,000
Left after overheads
£60,000
Before your pay and tax
Margin you'd need
45.3%
To cover overheads and pay you
You're £40,000 a year short of paying yourself £100,000. You'd need a gross margin of 45.3%, or £100,000 more turnover at today's margin with no extra overheads.
Before corporation tax and personal tax.
Your result is ready
Enter your name and email to see it.
You'll also get my letter for owners. Leave any time.
Your figures never leave your device. Only your name and email are sent.
The sign-up form hasn't loaded. Try again in a moment, or book a virtual coffee and I'll run your numbers with you.
How it works
How do you calculate profit margin?
Gross profit is the selling price minus the cost of making or delivering what you sold. Gross margin is that profit as a share of the price.
Gross margin % = (price − cost) ÷ price × 100So a job you sell for £100 that costs £60 to deliver makes £40 of gross profit, a 40% margin.
Margin or markup: which one are you using?
Markup is the same profit as a share of the cost, not the price.
Markup % = (price − cost) ÷ cost × 100The £40 profit on that £100 job is a 40% margin but a 67% markup. If you price by adding 40% to your costs, you are only making a 29% margin. That gap is where a lot of owners lose money without noticing.
Why your margin decides what you get paid
Your pay comes out of what's left at the bottom of the profit and loss. Revenue comes in at the top, the cost of delivering the work comes out, then the overheads, then the tax, and the owner gets whatever is left. That is why an owner can have the best turnover year on record and still take home less.
Step 2 of the calculator turns that round. Instead of hoping something is left, it starts with the number you want to be paid and works out the margin the business needs to make it happen:
Margin you need = (overheads + what you want paying) ÷ turnover × 100If the answer is higher than the margin you make today, you have three levers: put prices up, bring the cost of delivery down, or grow turnover without the overheads growing with it. The price lever is usually the fastest; the price increase calculator shows how many customers you could lose before a rise costs you anything.
More on the order to do it in: how to pay yourself as a business owner.
Questions people ask
Do you keep my figures?
No. The sums run on your own device: the figures you type are never sent to us or kept on our servers, and they stay strictly private. To see your result you enter your name and email, and those are the only details we hold.
How do you calculate profit margin?
Take the cost away from the selling price to get the gross profit, divide the gross profit by the selling price, and multiply by 100. A product that sells for £100 and costs £60 to make or deliver has a £40 gross profit and a 40% gross margin.
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. The same £40 profit on a £100 sale with a £60 cost is a 40% margin but a 67% markup. Mixing them up is one of the most common pricing mistakes, because a 40% markup only gives you a 29% margin.
What is the difference between gross margin and net margin?
Gross margin only takes off the cost of making or delivering what you sold. Net margin also takes off the overheads: salaries, premises, software, finance costs and everything else it costs to run the business. A healthy gross margin can still leave a thin or negative net margin if the overheads have grown faster than sales.
What is a good profit margin for a small business?
It depends on the sector, so the only fair comparison is with businesses like yours: your accountant, your trade body or the published accounts of competitors at Companies House will tell you what is normal in your industry. The more useful question for an owner is the one this calculator answers: is your margin big enough to cover the overheads and still pay you what you want?
Does this include tax?
No. The figures are before corporation tax and before any tax you pay personally on dividends or salary. Use them to see whether the business can afford your pay at all, then talk to your accountant about the most tax-efficient way to take it.
Built by Dr Lewis Haydon, a business coach and mentor in Birmingham, UK, who owns and invests in businesses. Pay, profit, margin, revenue and price are the five levers he works through with owners whose business has grown but whose pay hasn't.
Next step
Margin there, but nothing left for you?
Bring your numbers to a 30-minute virtual coffee and leave with a straight answer on which lever to pull first.
Book a virtual coffee