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//// Business · Profitability

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.

Where this fits

📦 Business & Seller OpsGoing 1099FreelancersFounders

This tool lives inside Going 1099 and is most useful for freelancers and founders.

Corp Tax Rate21%
SE Threshold$400
FICA Cap 2024$168,600
Input period

Monthly figures

Total client billings

$

Subcontractors, materials, project software

$

Rent, utilities, subscriptions, insurance

$

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?

ScenarioChangeNet ProfitNet MarginΔ Profit
+10% Revenue$18K$60K30.3%+$18K
−10% COGS$-4K$46K25.3%+$4K
−10% Overhead$-3K$45K25.0%+$3K
1

Gross Profit

Gross Profit = Revenue − COGS

$180K − $36K

= $144K (80.0% margin)

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

2

Operating Profit

Operating Profit = Gross Profit − Overhead

$144K − $30K

= $114K (63.3% margin)

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

3

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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