Calculate gross margin percentage from revenue and cost. Essential for pricing, profitability analysis, and reporting.
Total revenue from the sale (selling price).
Direct cost of producing or buying the goods sold.
Gross Margin
40.00%
Gross Profit
$400.00
Revenue
$1000.00
COGS
$600.00
Formula Used
((Revenue − Cost) ÷ Revenue) × 100
((Revenue − Cost) ÷ Revenue) × 100
Gross margin is the percentage of revenue that remains after subtracting the cost of goods sold. It measures the profitability of your core product or service before operating expenses.
A retailer sells a jacket for $200. The cost to acquire it from the supplier is $120. Gross Margin = ((200 − 120) ÷ 200) × 100 = 40%. This means 40 cents of every dollar of revenue contributes to overhead and profit.
It varies by category. Apparel often runs 50–60%, grocery 20–30%, and electronics 10–20%. Benchmark against your own category.
No. Margin is calculated as a percentage of revenue, while markup is calculated as a percentage of cost. They are related but not equal.
No. Use net revenue (excluding sales tax) when calculating gross margin.
No. Gross margin only subtracts COGS. Operating margin and net margin account for additional expenses.
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