Gross Margin Calculator
Choose a Gross Margin Calculator
Note: These calculations are only for illustrative purposes and are not a substitute for professional advice.
How to use a Gross Margin Calculator
To calculate gross margin on a particular product or service
Enter the revenue earned from a particular product or service and the costs of providing that product or service (known as cost of sales). The gross margin calculator does the rest. Prices and costs change over time so using revenue and cost data from longer periods – like a quarter or a year – will give you a more accurate picture of margin.
To calculate gross margin across the business
Enter your total sales revenue and total cost of sales for a given time period. The gross margin calculator will spit out your profit percentage. Try to use revenue and cost data from longer time periods – like a quarter or a year – as that will give a more reliable picture of your gross margin.
To set prices
Enter a proposed sale price for a product or service and the costs of providing that product or service to the customer. The calculator will tell you what margin you’d make at that price.
Gross Margin Calculator FAQ
What is margin?
Margin (short for gross margin) is the percentage of sales revenue that’s left after a business has paid for the products or services its customers bought. It’s sometimes called profit percentage.
Gross margin formula
Gross profit / Revenue x 100 = Gross profit margin. To calculate gross margin you need to know your gross profit, which is revenue minus cost of sales. You divide that gross profit by the revenue and multiply it by 100 to see what percentage of revenue is gross profit. Or you could just enter your revenue and cost into the profit margin calculator on this page.
How is margin different to markup?
Margin and markup refer to the same thing – your gross profit – but from different perspectives. Margin shows gross profit as a percentage of revenue. Markup shows gross profit as a percentage of costs. So markup is the percentage you add to the cost of a product or service to arrive at a sale price.
Why gross margin matters
Gross profit is the money left after paying for the products or services you sell. This bucket of money will be used to pay for general costs like rent, utilities, insurance and so on. Only once all those additional costs are paid can you think about pocketing a net profit – which is the money your business gets to keep. Gross margin is therefore critical to the viability of your business. If gross margins are too tight, you may not generate enough gross profit to meet your general costs and bank a net profit.