This study was conducted to find out whether dairy farmers could increase their profits through intensification of input use. Data was collected from 150 farmers in three dairy production systems. Data collected included the resources used in milk production, yields obtained, prices of inputs and output and the problems faced by farmers in dairy production. Gross margin analysis was done and results indicated that the GMs for the three systems are not significantly different from each other. Quadratic and Cobb-Douglas functions were fitted using the inputs used in dairy production and marginal products equated to inverse price ratios. The results showed that the highest scope for increasing milk yield and profit exists in zero grazing where it is possible to increase milk yield by 94.4% through increased use of concentrates and farm by-products. For semi-zero and extensive grazing systems, farmers could increase milk yield by 57.5% to reach economic optimum by using more concentrates and forages. The important conclusion which can be drawn from this study is that there is unexploited potential in the three dairy production systems. The study recommends that farmers should be encouraged to use more concentrates and by-products by addressing problems which lead to limited use of concentrates and by-products.