What is a good profit margin?

It depends on the industry. Retail typically has 2-5%, restaurants 3-9%, SaaS companies 60-80%, and consulting 30-50%.

What is the difference between gross and net profit margin?

Gross margin subtracts only the cost of goods sold. Net margin subtracts all expenses including taxes, interest, and operating costs.

Calculate your profit margin to understand how much profit you make on each sale.

Calculate your profit margin to understand how much profit you make on each sale.

Revenue*

Cost*

Retail store

Revenue: $100,000, Cost: $75,000

25% margin

SaaS company

Revenue: $50,000, Cost: $20,000

60% margin

Confusing markup with margin

Fix: Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. They are different calculations.

Not including all costs

Fix: For an accurate margin, include all costs: COGS, overhead, and operating expenses.