Profit Margin Calculator
Enter your revenue and direct costs to see your gross margin - then add your software and tool spend to see your real net margin, and exactly how many percentage points your stack is costing you.
Example: a lean solo stack
$4,000/mo revenue with $600/mo in COGS is a 85% gross margin ($3,400). Add a $175/mo software stack (matching the Online Business Cost Calculator's own example) and net margin drops to 81% ($3,225) - 4% of margin, or $2,100/year, going to tools. Enter your own numbers above to see your real margin.
Methodology
Gross profit is revenue minus COGS; gross margin is gross profit divided by revenue. When you include software costs, net profit is gross profit minus your monthly software spend, and net margin is net profit divided by revenue. Margin lost to software is the percentage- point gap between gross and net margin, floored at zero.
Data source: none - every figure is computed entirely from the numbers you enter. Last reviewed: September 2026.
See our full calculation methodology for the exact formula and every calculator's data sources.
Frequently asked questions
What's the difference between gross margin and net margin?
Gross margin only subtracts your direct costs (COGS) from revenue. Net margin, as this calculator uses it, also subtracts your software and tool costs, showing what's actually left after both.
What counts as COGS for an online business (vs. a physical product business)?
For a digital business, COGS is usually the direct cost of delivering what you sold - payment processing fees, a contractor or freelancer paid per delivery, or a per-unit cost. It excludes general overhead like software subscriptions, which is what the separate software-cost field is for.
Why does this calculator ask about software costs?
Most profit margin calculators stop at COGS and ignore the recurring software stack, even though that's often the single biggest hidden drag on margin for a lean online business. Toggling it on shows exactly how many percentage points your tools are costing you.
What's a "good" profit margin for an online business?
It varies a lot by business model - a service business might run 60-80% margins, while a business with real delivery costs may run much lower. There's no universal healthy number; the more useful question is whether your margin is trending in the direction you expect as you scale.
Can I use this if I sell a physical product instead of a digital one?
Yes - the calculator is just revenue minus COGS minus (optionally) software costs, which works the same regardless of what you sell. For a physical product, COGS should include your actual product/materials cost, not just fees.
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