Profit Margin Calculator
Calculate your gross and net profit margin in seconds. See how much you really earn on every sale and use the numbers to fine-tune prices and costs.
What is profit margin?
Profit margin shows how much of your revenue is left as profit. It is expressed as a percentage and is one of the most important numbers in any business, because it tells you whether your prices and costs add up.
The calculator shows two kinds of margin:
- Gross margin: (revenue − cost of goods sold) ÷ revenue × 100. Shows what you earn on the product or service itself. In Danish accounting this is called dækningsgrad.
- Net margin: (revenue − cost of goods sold − operating expenses) ÷ revenue × 100. Shows what is left once all running costs are paid.
Worked example
A business has revenue of DKK 1,000,000, cost of goods sold of DKK 600,000 and operating expenses of DKK 250,000. Gross margin is 40% and net margin is 15%. Out of every DKK 100 in sales, DKK 15 is left once everything is paid.
What is a good profit margin?
It depends on your industry. Retail often runs on low gross margins and high volume, while consultancies and software companies typically have high gross margins but larger payroll costs. Compare yourself with businesses in your own sector, and with your own numbers over time – the trend often says more than a single figure.
Margin is not the same as markup
Markup is calculated on cost price, margin on selling price. Add a 25% markup to an item costing DKK 100 and you sell it for DKK 125 – but your margin is only 20%. Mixing the two up is a classic cause of underpricing.
How to improve your profit margin
- Review your prices – especially on products and services you haven't adjusted in a while.
- Renegotiate purchase prices or find alternative suppliers.
- Cut fixed costs you don't use: subscriptions, unused space and overlapping insurance policies.
- Focus on the customers and products with the highest gross margin.
Profit margin and insurance – why they are linked
Insurance affects your profit margin in two places: as a fixed operating cost, and as protection for the earnings your margin is built on.
An uninsured loss costs many times its own size
The lower your margin, the more extra revenue it takes to cover an unexpected loss. With a 10% net margin, you need DKK 500,000 in additional sales to earn back an uninsured DKK 50,000 liability claim. That's why business liability insurance and business contents insurance often pay for themselves – even for small companies.
Contribution margin is what you lose when operations stop
If you have to close after a fire or flood, your contribution margin – revenue minus variable costs – disappears, while rent, salaries and other fixed costs keep running. That is exactly what business interruption insurance (driftstabsforsikring) is designed to cover. Knowing your gross margin tells you how big a loss your business needs to be able to absorb.
Don't pay too much – or too little
Insurance is a fixed cost that comes straight off your net margin. If you are over-insured or double-insured, you pay for cover you can never claim. If you are under-insured, a claim may only be partly paid out. The right cover follows the actual size of your business – and adjusts as you grow.
Profit margin questions
Subtract your costs from revenue and divide the result by revenue. Multiply by 100 to get a percentage. Gross margin only subtracts cost of goods sold; net margin also subtracts operating expenses.
Gross margin shows what you earn on the product or service itself. Net margin shows what is left after rent, salaries, insurance and other operating costs are paid as well.
There is no single right number – it depends on your industry and business model. Compare with businesses in your sector and with your own numbers over time. A falling margin is a sign to look at prices or costs.
Markup is calculated on cost price, margin on selling price. A 25% markup on an item costing DKK 100 gives a selling price of DKK 125 and a margin of 20%.
Yes. Business insurance premiums are a running operating cost and therefore part of your net margin. In Denmark, business insurance is generally tax-deductible – ask your accountant if you are unsure about your situation.
An uninsured loss has to be paid out of profit, and with a low margin it takes a lot of extra sales to earn it back. The right business insurance moves that risk off your bottom line.
Didn't find the answer to your question?
About Plain – business insurance without the hassle
Plain is business insurance for small and medium-sized companies in Denmark – digital, transparent and paperwork-free. You get a price online in minutes, pay monthly and keep all your cover in one place:
- Occupational injury insurance (arbejdsskadeforsikring) – mandatory in Denmark once you have employees
- Business liability insurance (erhvervsansvarsforsikring) – if you or your staff damage other people or their property
- Business contents insurance (løsøreforsikring) – furniture, IT equipment and stock, including home offices
- Business health insurance (sundhedsforsikring) – fast access to treatment for you and your team
Connect your payroll or accounting system and Plain keeps your cover up to date automatically as headcount, revenue or assets change. You pay for the cover you actually need – no more, no less. Get your price.
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