Calculate Your Margins
Enter your revenue and costs below. Results update instantly.
Total income from client work per month.
Total billable hours per month (for effective rate calculation).
Monthly Business Costs
For net margin calculation. Most freelancers: 25-35%.
Your Profit Margins
Gross Profit
$8,950
Revenue − costs
Gross Margin
89.5%
Before taxes
Effective Hourly Rate
$52
Net profit ÷ hours
Net Profit
$6,265
After taxes
Net Margin
62.7%
After all expenses + tax
Monthly Break-Even
$1,050
Minimum revenue needed
How we calculated this
Invoice at margins that grow your business
Create professional invoices and track revenue to keep your margins healthy.
Healthy Profit Margins by Service Type
How your margins compare to industry averages for service-based businesses.
| Service Type | Gross Margin | Net Margin | Notes |
|---|---|---|---|
| Software Development | 70–85% | 35–50% | Low material costs |
| Consulting | 65–80% | 30–45% | Travel costs can vary |
| Design | 60–75% | 25–40% | Software subscriptions |
| Writing / Content | 75–90% | 35–50% | Minimal overhead |
| Photography / Video | 45–65% | 20–35% | Equipment-heavy |
| Construction / Trades | 30–50% | 10–25% | Materials + labor costs |
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Frequently Asked Questions
What is a good profit margin for freelancers?
Most successful freelancers maintain gross margins of 50-70% and net margins of 25-40%. Since freelancers sell time and expertise (low material costs), margins should be higher than product businesses. If your net margin is below 20%, you may be undercharging or overspending.
What's the difference between gross and net profit margin?
Gross margin is revenue minus direct costs (cost of delivering your service), divided by revenue. Net margin subtracts ALL costs including taxes, insurance, software, and overhead. Gross margin shows project profitability; net margin shows overall business health.
How do I increase my profit margin?
Three ways: raise your rates (most effective), reduce expenses (review subscriptions and tools), or increase efficiency (templates, automation, better processes). Most freelancers benefit most from simply raising their rates 10-20%.
What costs should I include in my margin calculation?
Include everything you spend to run your business: software subscriptions, insurance, equipment, marketing, professional development, accounting fees, office/coworking costs, and estimated taxes. Don't forget to include your own salary as a cost if calculating business margins.
How often should I check my profit margins?
Review margins monthly or at minimum quarterly. Track them per project and overall. If margins are declining, investigate whether it's due to scope creep, rising costs, or rate stagnation. Use this data when deciding whether to raise rates.
What's the difference between markup and margin?
Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. A 50% margin means you keep half of revenue. A 50% markup means you charge 1.5× your cost. They're different numbers for the same situation — a 100% markup equals a 50% margin.
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