Compare Gross Margin, Operating Margin, and Net Margin side-by-side to understand enterprise profitability.
Calculate all three key margin metrics for your business from revenue and expense data with this free tool.
Business margins are profitability ratios that express profit as a percentage of revenue. The three key margins are gross margin (gross profit divided by revenue), operating margin (operating profit divided by revenue), and net margin (net profit divided by revenue).
Each margin reveals a different layer of business profitability.
Gross margin equals (Revenue minus COGS) divided by Revenue, times 100. It shows how efficiently you produce or buy goods relative to what you sell them for.
A higher gross margin means more money left over to cover operating expenses and profit.
Operating margin equals (Revenue minus COGS minus Operating Expenses) divided by Revenue, times 100. It shows how efficiently your business model covers both production costs and overhead.
A positive operating margin means the core business is profitable before taxes and financing costs.
Net margin equals Net Profit divided by Revenue, times 100. It is the bottom-line percentage of every rupee of revenue that you keep as final profit.
For most small businesses, net margin is the most closely watched performance metric.
Declining gross margin means your COGS is rising relative to revenue: raise prices or reduce input costs. Declining operating margin means overheads are growing faster than revenue: review and cut OpEx.
Track all three margins monthly to catch problems early.
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Common questions about Business Margin Calculator: Calculate Gross, Operating, and Net Margins on Tez Invoice.
Gross profit divided by revenue times 100. Shows how much profit remains after direct production costs.
Net profit divided by revenue times 100. Shows what percentage of revenue you keep as final profit.
Yes. Free with no sign up.
It varies by industry. Retail may be 2-5%. Software can be 20-40%. Professional services: 15-30%.
Raise prices, reduce COGS, cut operating expenses, or increase revenue volume.
Yes. Free with no sign up and no usage limits.
Yes. Fully responsive.
No. In-browser processing only.
Yes. Designed for small businesses and freelancers.
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