Gross Margin Calculator

Gross margin is the percentage of revenue remaining after subtracting the cost of goods sold (COGS). A 40% gross margin means for every $1 of sales, $0.40 is left to cover operating expenses and profit.

Margin is calculated as a percentage of the selling price. Markup is calculated as a percentage of the cost. A product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup.

Gross margins vary widely by industry. Software companies often exceed 70-80%. Grocery stores operate on 20-30%. Manufacturing is typically 30-50%. Compare your margin to industry benchmarks.

Cost of Goods Sold includes direct materials, direct labor, and manufacturing overhead for the products sold. It excludes indirect costs like selling, general, and administrative expenses (SG&A).

Raise prices, reduce material or production costs, improve production efficiency, shift product mix toward higher-margin items, or reduce discounting. Even small margin improvements have large profit impacts at scale.

Gross margin only subtracts COGS from revenue. Net margin subtracts all expenses including operating expenses, interest, and taxes. Net margin is a more complete measure of overall profitability.