Free calculator
Gross Margin Calculator
Turn revenue and cost of goods sold into your gross profit and margin percentage in one step.
Gross Margin Calculator
Turn revenue and cost of goods sold into your gross profit and margin percentage in one step.
$
$
Gross margin
64%
$32,000Gross profit
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What the gross margin tells you
Gross margin is the share of revenue left after the direct cost of delivering your product or service (your cost of goods sold). It shows how efficiently you turn sales into profit before overhead.
A higher gross margin means more of every dollar is available to cover operating costs and profit. Tracking it over time reveals pricing power and cost creep early.
Formula
Gross margin % = (Revenue − COGS) ÷ Revenue × 100
How to use it
- Enter your total revenue for the period.
- Enter your cost of goods sold (COGS) for the same period.
- Read your gross profit and gross margin percentage.
Worked example
On $50,000 revenue with $18,000 COGS, gross profit is $32,000 and your gross margin is 64%.
FAQ
Common questions
Gross margin is the percentage of revenue remaining after cost of goods sold. It measures how profitably you deliver your core product or service, before overhead.
It varies widely by industry—software often runs high, while product or hardware businesses run lower. Compare against peers in your sector and watch your own trend.
Gross margin subtracts only direct costs (COGS). Net margin subtracts all costs, including operating expenses, interest, and taxes, to show final profitability.
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