How to Calculate Profit Margin (US, UK, Canada)

Profit margin tells you how much of every dollar, pound or Canadian dollar of revenue you actually keep. Freelancers and small businesses in the United States, United Kingdom and Canada use it to set prices and check health of the business.

Free Profit Margin Calculator

Revenue (sales) Cost of goods / direct costs Other operating expenses (optional)

Formulas

Gross profit = Revenue − Cost of goods sold (COGS)

Gross margin % = (Gross profit ÷ Revenue) × 100

Net profit = Gross profit − Operating expenses

Net margin % = (Net profit ÷ Revenue) × 100

Margin vs markup

Margin is based on selling price (what share of revenue is profit).
Markup is based on cost (how much you add on top of cost).

Example: Cost $60, sell $100 → Markup 66.7%, Margin 40%.

Why it matters for freelancers

If you only look at revenue, you can feel busy but keep little money. Tracking margin (and using income & expense tools) shows the real picture for pricing and tax planning in the US, UK and Canada.

Track income, expenses and see cash flow clearly.

Open Free Income & Expenses tool on Invoice Luxe →

FAQ

What is a good profit margin?

It depends on industry. Many service freelancers aim for net margins well above 20–30% after expenses. Product businesses often run lower gross margins.