Find profit, margin percentage, and markup percentage for any product or service.
Profit = Selling price − Cost price.
Margin % = Profit / Selling price × 100.
Markup % = Profit / Cost price × 100. These are often confused but answer different questions.
Gross profit margin and net profit margin are often quoted together as if they measure the same thing at different stages — but they actually answer two distinct business questions, and a business can look healthy on one while struggling on the other. Gross margin is revenue minus the direct cost of producing your goods or services (cost of goods sold), divided by revenue — it answers: "can I make money with the way I'm pricing and producing this product, before anything else is factored in?" It's a pure measure of production and pricing efficiency, unaffected by how much you spend on rent, marketing, salaries or taxes.
Net profit margin goes further, subtracting every expense — operating costs, interest, taxes, everything — from revenue, then dividing by revenue. It answers a broader question: "after running the entire business, how much of each rupee of revenue actually turns into profit?" A business can have a strong gross margin (meaning its core product pricing is sound) but a weak or negative net margin if overhead, marketing spend or debt payments are eating everything gross profit generates — a genuinely common pattern for growing businesses investing heavily in customer acquisition or expansion. Reading only one number in isolation misses this: a healthy gross margin with a poor net margin points to a spending or overhead problem, not a pricing problem, while a weak gross margin signals the core product or service pricing itself needs attention before anything else will fix profitability.
Gross margin is (Revenue − Cost of Goods Sold) ÷ Revenue — it measures how profitably you produce and price your core product, before any other costs. Net margin is (Revenue − All Expenses) ÷ Revenue — it measures overall business profitability after every cost, including overhead, marketing, interest and taxes.
Yes, and it's a common pattern — particularly for growing businesses spending heavily on marketing, staff, or expansion. A strong gross margin shows the core product pricing is sound, but if overhead and other expenses consume everything gross profit generates, net margin can be weak or even negative despite healthy production economics.
It depends on which one is actually weak. A poor gross margin points to a pricing or production-cost problem that needs addressing at the product level first. A healthy gross margin paired with a poor net margin points instead to an overhead or spending problem elsewhere in the business — the fix is different depending on which number is the actual weak point.
Because each margin isolates a different part of the business. Gross margin shows whether the core offering is priced and produced efficiently; net margin shows whether the entire operation, including all its overhead and financial structure, ultimately converts revenue into real profit. Together they give a much clearer diagnostic picture than either number alone.