Calculator · Business Planning
Profit margin calculator
Calculate gross and net profit margins from your revenue and costs, or work out the selling price you need to hit a target margin.
Tax year 2025/26
Calculator answer
Enter your figures to estimate the result for the 2025/26 tax year. The output is a planning estimate only and should be checked against HMRC guidance before filing or paying tax.
Gross profit margin
60.0%
- Revenue
- £1,000.00
- Cost of goods / direct cost
- − £400.00
- Gross profit
- £600.00
- Gross margin
- 60.0%
- Markup on cost
- 150.0%
- Overheads
- − £200.00
- Net profit
- £400.00
- Net margin
- 40.0%
How this calculator works
Gross profit margin is revenue minus the direct cost of delivering your product or service (cost of goods sold), expressed as a percentage of revenue. It tells you how profitable your core offering is before overheads. For service businesses, target 40–70%. For product businesses, 30–50% is typical.
Net profit margin is what remains after all costs — including overheads like rent, software, and marketing — expressed as a percentage of revenue. A healthy UK SME typically targets 10–20% net margin.
Markup is the percentage added to your cost price to arrive at the selling price. It is not the same as margin. A 67% markup on a £60 cost gives a £100 price and a 40% margin. Always confirm which metric you are using when comparing with industry benchmarks.