Net Profit Calculator

Find your true bottom-line net profit - after cost of goods sold, operating expenses, and taxes, not just gross profit.

Net Profit Calculator

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Revenue

Cost of goods sold (COGS)

Operating expenses (rent, salaries, marketing, etc.)

Tax rate (%)

Net profit

$63,200.00

Gross profit

$200,000.00

Net margin

12.64%

The formula

Gross profit = Revenue - COGS Operating profit = Gross profit - Operating expenses Net profit = Operating profit - Taxes (Operating profit x Tax rate) Net margin = (Net profit / Revenue) x 100

Example

$500,000 revenue, $300,000 COGS, $120,000 operating expenses, 21% tax rate: gross profit = $200,000, operating profit = $80,000, tax = $16,800, net profit = $63,200, a 12.64% net margin.

Step-by-step guide

Enter total revenue for the period.
Enter cost of goods sold - the direct cost of producing what was sold.
Enter operating expenses - everything else it costs to run the business: rent, salaries, marketing, software, insurance, and so on.
Enter your effective tax rate and read the true bottom-line net profit and margin.

The three layers of profit, and why each one matters

Gross profit shows whether your core product or service pricing works at all - can you sell something for more than it costs to make? Operating profit adds in the real cost of running the business day to day, showing whether the whole operation is sustainable, not just individual sales. Net profit is the true final number after taxes - what's actually left for the owners or to reinvest. A business can look healthy at one layer and struggling at another; checking all three tells a much more complete story than any single figure alone.

Common mistakes

Quoting gross margin (from a Profit Margin Calculator) as if it were overall business profitability - gross margin ignores operating expenses and taxes entirely, and can look strong even when the business as a whole is losing money.

Missing an expense category entirely when estimating operating expenses - software subscriptions, insurance, and one-off professional fees are commonly forgotten items that understate true costs.

Frequently asked questions

What's the difference between this and the Profit Margin Calculator?

The Profit Margin Calculator shows gross margin - revenue minus only the direct cost of goods sold. This tool goes further, also subtracting operating expenses and taxes to reach a true bottom-line net profit figure.

What tax rate should I use?

Your effective tax rate - the actual overall percentage of taxable income paid in taxes - rather than a marginal bracket rate, since actual tax liability depends on your specific business structure, deductions, and jurisdiction.

What if operating profit is negative?

This calculator doesn't apply tax to a loss, since a business operating at a loss typically doesn't owe income tax on that period (though actual tax treatment of losses, including any carryforward rules, varies by jurisdiction).

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