Profit Margin Calculator

Enter revenue, direct costs, overhead, and owner draw — see gross, operating, and net margin with a health rating. Sensitivity table shows exactly how +10% revenue or −10% costs move the needle.

Corp Tax Rate21%(federal flat rate)

SE Threshold$400(net earnings floor)

FICA Cap 2024$168,600(SS wage base)

Input period

Monthly figures

Revenue/mo

Total client billings

Direct Costs (COGS)/mo

Subcontractors, materials, project software

Overhead (OpEx)/mo

Rent, utilities, subscriptions, insurance

Owner Draw/mo

Your salary or distribution

Gross Profit$144K

Revenue − COGS80.0%

Operating Profit$114K

Gross − Overhead63.3%

Net Profit$42K

Operating − Draw23.3%

Healthy20–35% net margin

Solid margins. You have buffer for reinvestment, slow periods, and taxes. Industry benchmark for freelance services.

Net margin breakdown23.3%

Direct Costs

$36K

Overhead

$30K

Owner Draw

$72K

Net Profit

$42K

Sensitivity analysis — what if?

Scenario	Change	Net Profit	Net Margin	Δ Profit
+10% Revenue	$18K	$60K	30.3%	+$18K
−10% COGS	$-4K	$46K	25.3%	+$4K
−10% Overhead	$-3K	$45K	25.0%	+$3K

Gross Profit

Gross Profit = Revenue − COGS

$180K − $36K

= $144K (80.0% margin)

COGS = direct project costs: subcontractors, materials, project-specific software.

Operating Profit

Operating Profit = Gross Profit − Overhead

$144K − $30K

= $114K (63.3% margin)

Overhead = fixed recurring costs: rent, utilities, subscriptions, insurance.

Net Profit

Net Profit = Operating Profit − Owner Draw

$114K − $72K

= $42K (23.3% margin)

For freelancers, owner draw includes SE tax liability. Industry benchmark: 20–35%.

Key insight

Net margin is the true test of business health — not revenue. A $200K/yr freelancer keeping $40K net (20%) outperforms a $400K/yr one keeping $30K net (7.5%).

Use this result in →

Break-Even Calculator →1099 Quarterly Tax →Rate Negotiation →

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