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Operating Margin Calculator

Calculate operating profit margin.

Operating Margin Calculator - Free Business Profitability Tool

Operating Margin Calculator

Calculate operating profit margin to analyze business efficiency and profitability

Financial Data

$

Total sales or revenue for the period

$

Total operating expenses (COGS + SG&A)

Alternative Input Method

Or enter COGS and SG&A separately:

$
$

Results

Operating Profit
Operating Margin

Margin Analysis

Performance Level:
Industry Benchmark: 5-15% (varies)
For every $100 in sales:

Revenue Breakdown

Operating Profit
Operating Expenses

How Operating Margin is Calculated

Formula

Operating Margin = (Operating Profit ÷ Revenue) × 100

Where:
Operating Profit = Revenue - Operating Expenses

Components

  • Revenue: Total sales or income
  • Operating Expenses: COGS + SG&A expenses
  • COGS: Direct costs of producing goods/services
  • SG&A: Selling, General & Administrative expenses

Understanding Operating Margins

Low Margins (0-5%)

  • • Tight cost control needed
  • • High competition
  • • Operational inefficiencies
  • • Need to reduce expenses

Moderate Margins (5-15%)

  • • Industry average
  • • Stable operations
  • • Room for improvement
  • • Focus on optimization

High Margins (15%+)

  • • Excellent efficiency
  • • Strong competitive position
  • • Pricing power
  • • Well-managed operations

Improving Operating Margins

Revenue Optimization

  • Increase pricing strategically
  • Focus on high-margin products
  • Improve sales mix
  • Enhance value proposition

Cost Management

  • Reduce COGS through efficiency
  • Optimize operational processes
  • Negotiate better supplier terms
  • Implement cost controls
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