Profit Margin Calculator

Know if your projects are actually profitable. Calculate gross margin, net margin, and markup.

Direct costs: labor, materials, subcontractors, software licenses for this project
Indirect costs: office, insurance, marketing, administrative time
Gross Profit
$2,000.00
Gross Margin
40.0%
Net Profit
$1,500.00
Net Margin
30.0%
Markup %
66.7%
on direct costs

Understanding Profit Margins for Freelancers

Gross vs Net Margin

Gross margin = (Revenue - Direct Costs) / Revenue. This tells you if your core service is profitable before overhead. Aim for 40%+ for service businesses.
Net margin = (Revenue - All Costs) / Revenue. This is your actual take-home profit after everything. 20-30% is healthy for a solo freelancer.

Common Mistakes

  • Forgetting to include your own labor as a cost. Your time has value.
  • Not accounting for software subscriptions per project.
  • Underestimating revision time (budget 20% extra for revisions).
  • Ignoring payment processing fees (Stripe/PayPal take 2.9%+$0.30).