Gross and net profit margin calculator
Compare gross and net profitability using one illustrative AED period. Inputs stay in your browser and are not stored, transmitted or sent to analytics.
Indicative result
Net revenue
AED 1,000,000.00
Gross profit
AED 400,000.00
Gross margin
40.00%
Markup on cost of sales
66.67%
Operating profit
AED 150,000.00
Operating margin
15.00%
Net profit
AED 140,000.00
Net margin
14.00%
Formulas and assumptions
Net revenue = gross revenue − discounts and returns.
Gross profit = net revenue − cost of sales.
Gross margin = gross profit ÷ net revenue × 100.
Markup = gross profit ÷ cost of sales × 100. Markup is not margin.
Operating profit = gross profit − operating expenses.
Operating margin = operating profit ÷ net revenue × 100.
Net profit = operating profit + other income − other expenses.
Net margin = net profit ÷ net revenue × 100.
Use one consistent reporting period and amounts excluding VAT. Discounts reduce revenue; cost of sales and operating expenses are entered separately. Negative results are shown as losses. This simplified management tool does not determine accounting profit, taxable income or distributable reserves.
Questions about margin analysis
How is gross profit margin calculated?
Gross margin is net revenue after discounts minus cost of sales, divided by net revenue, multiplied by 100.
What is the difference between margin and markup?
Margin divides profit by net revenue. Markup divides gross profit by cost of sales, so the percentages answer different questions.
How is net profit margin calculated?
This tool divides illustrative net profit after the entered operating and other items by net revenue and multiplies by 100. Confirm account classifications before using the result.
Can a margin be negative?
Yes. Gross or net margin is negative when the relevant costs and expenses exceed the revenue and income entered.