Gross Margin Calculator — Gross Profit & Margin Percentage
Enter your revenue and cost of goods sold to instantly calculate gross profit, gross margin percentage, and the corresponding markup on cost — the three key metrics of product profitability.
Percentage of revenue retained after direct production costs
40 %
Gross MarginCOGS
60%
Gross Profit
40%
- 1
Gross profit
100,000 − 60,000 = 40,000Revenue minus cost of goods sold. - 2
Gross margin
40,000 ÷ 100,000 × 100 = 40
How does this calculator work?
Gross Margin % = (Revenue − COGS) ÷ Revenue × 100. It shows what share of each sales dollar remains after direct production costs. Markup % = (Revenue − COGS) ÷ COGS × 100 — the same profit as a fraction of cost. Enter revenue and COGS to see gross profit, gross margin and markup instantly.
Formula
How this is calculated
Gross margin measures how much of each sales dollar remains after paying the direct costs of producing or purchasing the goods sold — it excludes operating expenses, interest and taxes. The two inputs are revenue (net sales after returns and discounts) and COGS (Cost of Goods Sold), which covers only direct production costs: raw materials, direct labour, manufacturing overhead and the purchase price of finished goods. Indirect costs such as selling, general and administrative expenses are not part of COGS and are excluded from gross margin.
Gross Profit is the simple difference: Revenue − COGS. Dividing that by Revenue and multiplying by 100 gives the Gross Margin percentage — for example, a 40% gross margin means 40 cents of every dollar of revenue is gross profit. Markup is the complementary metric: gross profit divided by COGS, expressed as a percentage of cost rather than revenue. A 40% gross margin corresponds to a 66.7% markup on COGS, which is why the two numbers are always different for the same product.
Gross margin varies widely by industry. Software companies often run 70–80%, retailers 20–50%, and food manufacturers 20–35%. A higher gross margin gives more room to cover operating costs and generate net profit. Because COGS classification differs between accounting standards, compare gross margins only within the same industry and accounting framework.
Frequently asked questions
Gross margin deducts only COGS (direct production costs) from revenue. Net profit margin deducts all costs — COGS, operating expenses (rent, salaries, marketing), interest and taxes. Gross margin is always higher than or equal to net profit margin for the same period.
Gross margin divides profit by the (larger) revenue figure; markup divides the same profit by the (smaller) COGS figure. For example, buying at 60 and selling at 100: gross margin = 40/100 = 40%, markup = 40/60 ≈ 66.7%. Margin and markup describe the same profit from different reference points.
COGS includes direct costs that vary with production: raw materials, component purchases, direct manufacturing labour and factory overhead. It does not include selling expenses, administration, R&D, depreciation on office equipment, or financing costs. The exact classification follows your accounting standard (GAAP, IFRS, etc.).
Also known as
TG we-Calculate Editorial Team. (2026). Gross Margin Calculator — Gross Profit & Margin Percentage [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/gross-margin-calculator
TG we-Calculate Editorial Team. "Gross Margin Calculator — Gross Profit & Margin Percentage." TG we-Calculate. 2026. https://we-calculate.com/calculator/gross-margin-calculator.
TG we-Calculate Editorial Team, "Gross Margin Calculator — Gross Profit & Margin Percentage," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/gross-margin-calculator
@misc{wecalculate_gross_margin_calculator, title = {Gross Margin Calculator — Gross Profit & Margin Percentage}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/gross-margin-calculator}}, year = {2026}, note = {TG we-Calculate} }
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