Profit Margin Calculator
Calculate gross margin, operating margin, net margin and markup for your UK business
Profit margin is a key indicator of your business's financial health. Understanding the different types of margins helps you identify where your business is performing well and where improvements can be made.
Types of Profit Margin
- Gross Margin: (Revenue - COGS) / Revenue - Shows production efficiency
- Operating Margin: (Gross Profit - Operating Expenses) / Revenue - Shows operational efficiency
- Net Margin: Final profit after all expenses / Revenue - Shows overall profitability
- Markup: (Gross Profit / COGS) x 100 - Shows profit over cost price
Author: Waqas Sagar, UK Tax Specialist | Reviewed: May 2025 | Source: Companies House financial benchmarks
What is a good profit margin for UK businesses?
It varies by industry. Retail typically sees 2-5% net margins, while professional services can achieve 15-25%. Software businesses often have margins of 20-40% or higher.
What's the difference between margin and markup?
Margin is profit as a percentage of selling price, while markup is profit as a percentage of cost. A 50% markup equals approximately 33% margin.
How do I improve my profit margins?
Focus on increasing prices where possible, reducing COGS through better supplier negotiations, and controlling operating expenses. Consider which products/services have the best margins.