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 cost. A 40% margin equals a 66.7% markup — same money, different denominator. Quote the wrong one and your price will be wrong.

What is a good profit margin?

It depends on the sector. Grocery retail often runs single-digit net margins, while software and professional services can run 20–40%. Compare with businesses like yours, not with a universal number.

Should I use net or gross figures?

Use the same basis for revenue, costs and expenses — all excluding VAT if you are VAT-registered, all including VAT if you are not. Mixing bases distorts every margin.

What if my net margin is negative?

You are losing money in that period: expenses exceed gross profit. The calculator will show it plainly — cut costs, raise prices, or both, and check the break-even calculator for the volume that fixes it.

Does margin include my salary?

Only if you count it in operating expenses. Owner-operators often forget this and report a 'profit' that is really their unpaid wage — include a realistic salary for honest margins.

How often should I check margins?

Monthly is a good habit for small businesses: material and delivery costs move, and a margin that slipped 3 points unnoticed can erase a quarter's profit.

Gross margin or net margin — which matters more?

Both. Gross margin shows whether your pricing and product costs work; net margin shows whether the whole business works after rent, salaries and overheads.

Can I use this for one product?

Yes — enter that product's revenue, its direct costs and the share of expenses it carries. Single-product margins are the cleanest way to spot an unprofitable line.

Profit Margin Calculator for Small Business Owners

By ExpatMoneyEU Research Team · Reviewed October 2026 · Published 26 October 2026 · Updated 26 October 2026

Business owner reviewing profit margins on paper in Europe

Researched by ExpatMoneyEU Research Team · Last updated 26 October 2026 · Data: the standard margin and markup formulas, applied to EUR business inputs you enter

Profit Margin Calculator

Revenue (€)

Cost of goods sold (€)

Operating expenses (€)

Your net margin is

25.0%

Worked example (the default inputs above): €10,000 revenue, €6,000 product costs, €1,500 expenses → gross profit €4,000 (40.0% gross margin), net profit €2,500 (25.0% net margin), markup on cost 66.7%.

Key fact: Margin and markup are not the same number: a 40% gross margin equals a 66.7% markup on cost — mixing them up is one of the most common pricing mistakes.

What this calculator does

This calculator turns revenue and costs into the three numbers that describe a business's profitability: gross margin (after direct product costs), net margin (after all operating expenses), and markup on cost (how much you add to cost to set a price).

→ Break-even calculator

How to use it

Enter your revenue for the period.
Enter your cost of goods sold — what the products or direct service delivery cost you.
Enter your operating expenses — rent, salaries, software, marketing — then read all three margins instantly.

→ E-commerce profit calculator

The formula

Gross profit = revenue − cost of goods sold. Gross margin = gross profit ÷ revenue. Net profit = gross profit − operating expenses. Net margin = net profit ÷ revenue. Markup = gross profit ÷ cost of goods sold. Example: (€10,000 − €6,000) ÷ €10,000 = 40.0% gross margin; (€4,000 − €1,500) ÷ €10,000 = 25.0% net margin; €4,000 ÷ €6,000 = 66.7% markup.

→ Business loan EMI calculator

Worked example with real numbers

A ceramics studio in Barcelona sells €10,000 of pottery in a month. Clay, glazes, firing and packaging cost €6,000, leaving €4,000 of gross profit — a 40.0% gross margin. Rent, the kiln's electricity share, market fees and software come to €1,500, leaving €2,500 net profit — a 25.0% net margin. The markup on cost is €4,000 ÷ €6,000 = 66.7%: for every €1 of product cost, the studio adds about €0.67. If material costs rose 10% to €6,600 with no price change, net margin would fall to 19.0% — which is why small cost rises deserve a price review, not silent absorption.

→ E-commerce profit calculator

Reference table

Margin versus markup — the same business, different lens (illustrative figures):

Gross margin	Markup on cost	What it means
20%	25.0%	€1 of cost sells for €1.25
33%	50.0%	€1 of cost sells for €1.50
40%	66.7%	€1 of cost sells for €1.67
50%	100.0%	€1 of cost sells for €2.00

→ Break-even calculator

Sources and disclaimer

Method: standard gross-margin, net-margin and markup formulas. Use revenue, costs and expenses from the same period and on the same VAT basis (all net or all gross). A 'good' margin varies enormously by sector — food retail runs thin, software runs high — so compare with your own sector, not with a universal benchmark.

Estimate only — not tax or financial advice. This tool estimates only. It is not tax, legal or financial advice and does not determine your actual tax, loan or lender decision — check your national tax authority, bank or a qualified adviser for your situation. Always verify current figures with the official source or a qualified adviser before making decisions.

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