Gross Margin Calculator
Calculate gross profit margin percentage from revenue and cost of goods sold (COGS).
Educational estimate. Not financial advice.
Gross margin ratio of 40.0% is healthy and meets industry standards.
A revenue of $100,000 with COGS of $60,000 yields a gross profit of $40,000. This represents a gross margin of 40.00% (meaning 40.0% of your revenue remains after accounting for direct production costs). The markup on cost is 66.67%.
How to Use the Gross Margin Calculator
Calculate your gross profit margin instantly. Enter your revenue and cost of goods sold (COGS) to see your gross profit, gross margin percentage, and markup. Use this calculator to benchmark profitability, set pricing, and evaluate business unit economics.
- Revenue / Selling Price ($): Bounded parameter in the mathematical model.
- Cost of Goods Sold — COGS ($): Bounded parameter in the mathematical model.
What Is Gross Margin? Gross Profit Margin vs Markup
Understand gross margin, how it differs from markup and net profit, and how to use it to evaluate business unit economics.
Read Full Guide →What is gross margin?
Gross margin is the percentage of revenue remaining after subtracting the cost of goods sold (COGS). Formula: Gross Margin = ((Revenue − COGS) ÷ Revenue) × 100. A 40% gross margin means 40 cents of every revenue dollar goes to gross profit — available to cover operating expenses, taxes, and net income.
What is the difference between gross margin and markup?
Gross margin is calculated as a percentage of the selling price (revenue). Markup is calculated as a percentage of the cost. If you buy an item for $60 and sell it for $100: Gross Margin = (100−60)/100 × 100 = 40%. Markup = (100−60)/60 × 100 = 66.7%. The two are different ways of expressing the same profit — but they produce very different numbers.
What is a good gross margin?
It depends heavily on the industry. Software companies often have gross margins above 70–80%. Retailers typically have gross margins of 20–50%. Restaurants average 60–70% gross margin but thin net margins after labour and overhead. Manufacturers often target 40–60%. Compare your gross margin against industry benchmarks, not a universal standard.
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