The method
How it is worked out
Gross margin = (revenue − COGS) ÷ revenue × 100
- revenue
- Sales revenue
- COGS
- Direct cost of goods/services sold
Gross Margin Calculator
Calculate gross profit and gross margin from revenue and cost of goods sold. The result updates as you type so you can compare scenarios quickly.
Keep in mind
What it leaves out
- Operating costsOverheads, salaries and financing costs are excluded.
- ClassificationBusinesses differ in what they classify as COGS.
- TaxTaxes are excluded.
Use the calculator to compare scenarios rather than as a guaranteed forecast.
About the Gross Margin Calculator
Calculate how much revenue remains after the direct cost of supplying a product or service. A founder, retailer or finance team can use the gross margin to review pricing and unit economics before operating costs are considered.
How it works and an example to tryShow less
How to use the result
Gross profit is revenue minus cost of goods sold, and gross margin is gross profit divided by revenue. The calculation depends on putting direct production or delivery costs into cost of goods sold consistently. Rent, administration and finance costs may still need paying from the amount left, so gross margin is not net profit.
Example to try
Enter a clothing brand's sales and the direct cost of making or buying the goods sold. Increase supplier costs while keeping sales unchanged to see the pressure on gross margin. Use the same accounting period for both inputs.
Put it to work
Try it on a real situation
Load an example
What moves the result most
Worked out from your figures above. Tap a row to try it.
Who uses it, and when
Retailers and e-commerce sellers reviewing product lines, manufacturers assessing supplier price rises, and founders deciding whether unit economics work before scaling.
Mistakes worth avoiding
- Leaving shipping, packaging or payment fees out of cost of goods sold.
- Judging a business healthy on gross margin without looking at overheads.
- Comparing your margin with another industry's benchmark.
Questions
What does the Gross Margin Calculator do?
Calculate gross profit and gross margin from revenue and cost of goods sold.
How should I use the result?
Gross profit is revenue minus cost of goods sold, and gross margin is gross profit divided by revenue. The calculation depends on putting direct production or delivery costs into cost of goods sold consistently. Rent, administration and finance costs may still need paying from the amount left, so gross margin is not net profit.
Does TechBullion store the information I enter?
The core calculation or transformation runs in your browser. Normal website security and analytics may still record page-level events, but the tool does not need to create a public record from your inputs.
What mistakes do people make with a gross margin calculator?
Leaving shipping, packaging or payment fees out of cost of goods sold. Judging a business healthy on gross margin without looking at overheads. Comparing your margin with another industry's benchmark.
Is the result guaranteed?
No. Use the result as a practical check or planning aid and verify important decisions with the relevant primary source, provider or professional advice.
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Calculator results are estimates based on the figures entered and are not financial, investment, legal or tax advice.