Profit Calculator
Gross, operating and net profit with their margins from revenue, cost of goods sold, operating expenses, other costs and tax rate — an income statement with a chart.
Profit Calculator: with the default inputs, net profit is $43,450.
Net sales for the period, after returns and discounts.
Direct costs of what you sold: materials, production labor, freight in, merchant fees if you count them here.
Rent, payroll, marketing, software, insurance, utilities, depreciation — the cost of running the business.
- Gross profit
- $150,000
- Operating profit (EBIT)
- $60,000
- Pre-tax profit
- $55,000
- Income tax
- $11,550
- Gross margin
- 60%
- Operating margin
- 24%
- Net margin
- 17.4%
Assumptions
- A single flat income tax rate applied to positive pre-tax profit; losses carry no tax benefit in this calculation.
- Depreciation is included in operating expenses (so operating profit is EBIT, not EBITDA).
- Cost of goods sold$100,00040%
- Operating expenses$90,00036%
- Interest & other$5,0002%
- Income tax$11,5505%
- Net profit$43,45017%
| Line | Amount | % of revenue |
|---|---|---|
| Revenue | $250,000 | 100% |
| − Cost of goods sold | -$100,000 | -40% |
| = Gross profit | $150,000 | 60% |
| − Operating expenses | -$90,000 | -36% |
| = Operating profit (EBIT) | $60,000 | 24% |
| − Interest & other (net) | -$5,000 | -2% |
| = Pre-tax profit | $55,000 | 22% |
| − Income tax | -$11,550 | -4.6% |
| = Net profit | $43,450 | 17.4% |
How this is worked out
The formula
Gross profit = revenue − cost of goods sold Operating profit (EBIT) = gross profit − operating expenses Pre-tax profit = operating profit − interest & other expenses + other income Net profit = pre-tax profit − income tax Margin % = profit ÷ revenue × 100 (at each level)
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Revenue
- Net sales for the period, after returns and discounts.in dollars · 0 or more · defaults to 250000
- Cost of goods sold
- Direct costs of what you sold: materials, production labor, freight in, merchant fees if you count them here.in dollars · 0 or more · defaults to 100000
- Operating expenses
- Rent, payroll, marketing, software, insurance, utilities, depreciation — the cost of running the business.in dollars · 0 or more · defaults to 90000
- Interest & other expenses(under More options)
- Loan interest, one-off losses, anything that isn't operations.in dollars · 0 or more · defaults to 5000
- Other income(under More options)
- Interest earned, asset sale gains, grants.in dollars · 0 or more · defaults to 0
- Income tax rate(under More options)
- US federal corporate rate is 21%. Pass-through businesses (LLC, S-corp, sole prop) use the owner's marginal rate; add state tax.a percentage · from 0 to 60 · defaults to 21
What you get back
- Net profitmain answer
- Gross profit
- Operating profit (EBIT)
- Pre-tax profit
- Income tax
- Gross margin
- Operating margin
- Net margin
What this assumes
- A single flat income tax rate applied to positive pre-tax profit; losses carry no tax benefit in this calculation.
- Depreciation is included in operating expenses (so operating profit is EBIT, not EBITDA).
About this calculator
"Profit" means three different things depending on who's asking, and they can be wildly different numbers. A store with $250,000 of sales might have $150,000 of gross profit, $60,000 of operating profit and $43,000 of net profit. This calculator walks the income statement from the top line to the bottom line and shows the margin at each step, so you can see where the money goes.
The three profits
- Gross profit = revenue minus cost of goods sold. It's what's left after paying for the product itself. Gross margin tells you whether your pricing and sourcing work at all.
- Operating profit (EBIT — earnings before interest and tax) = gross profit minus the cost of running the business: rent, staff, marketing, software, insurance, depreciation. This is the number that says whether the business model works.
- Net profit = what remains after interest on debt, one-off items and income tax. It's the owner's or shareholders' number.
What goes where
Cost of goods sold is anything that scales directly with what you sold: materials, production labor, freight in, packaging. Operating expenses are the overhead you'd pay even in a slow month. Interest belongs below operating profit so that two identical businesses with different financing show the same EBIT. If you're a sole proprietor, don't put your own draw in operating expenses unless you'd have to pay someone to do your job — but do remember that net profit is your income before self-employment tax.
Tax rate
The default is the 21% US federal corporate rate. Pass-through entities (sole proprietorships, partnerships, LLCs, S-corps) don't pay it; profit flows to the owners' returns and is taxed at their marginal rates plus self-employment tax where applicable. Add your state rate. No tax is applied to a loss, which in practice usually becomes a carryforward.
Reading the margins
Compare against your industry, not a universal figure: grocery nets 1–3%, restaurants 3–6%, construction 5–10%, professional services 15–25%, software 20%+. A falling gross margin points at pricing or supplier costs; a healthy gross margin with a thin operating margin points at overhead. The donut shows each revenue dollar's destination, which is the fastest way to spot the line that's out of proportion.
Frequently asked questions
▸What's the difference between gross profit and net profit?
Gross profit is revenue minus the direct cost of goods sold. Net profit subtracts everything else too — operating expenses, interest and tax. Gross profit measures your product economics; net profit is what you actually keep.
▸How do I calculate profit margin?
Divide the profit by revenue and multiply by 100. $43,000 net profit on $250,000 of revenue is a 17.2% net margin. You can do the same at the gross and operating levels.
▸What is EBIT?
Earnings before interest and taxes — the same thing as operating profit. It strips out financing and tax effects so businesses can be compared on operations alone. EBITDA additionally adds back depreciation and amortization.
▸What is a good net profit margin?
Highly industry-dependent: 1–3% is normal in grocery, 5–10% in construction and manufacturing, 10–20% in professional services and 20%+ in software. Around 10% is often quoted as 'average' across all US businesses.
▸Should my own salary be an operating expense?
If the business would need to pay someone to do your work, yes — it's a real cost of operating. If you're evaluating what the business earns for you as owner, leave it out and treat net profit as your compensation before personal tax.
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