The development of permanent magnets containing less or no rareearth elements is linked to profound knowledge of the coercivity mechanism. Prerequisites for a promising permanent magnet material are a high spontaneous magnetization and a sufficiently high magnetic anisotropy. In addition to the intrinsic magnetic properties the microstructure of the magnet plays a significant role in establishing coercivity. The influence of the microstructure on coercivity, remanence, and energy density product can be understood by using micromagnetic simulations. With advances in computer hardware and numerical methods, hysteresis curves of magnets can be computed quickly so that the simulations can readily provide guidance for the development of permanent magnets. The potential of rare-earth reduced and free permanent magnets is investigated using micromagnetic simulations. The results show excellent hard magnetic properties can be achieved in grain boundary engineered NdFeB, rare-earth magnets with a ThMn 12 structure, Co-based nano-wires, and L1 0 -FeNi provided that the magnet's microstructure is optimized.