Gross Margin Calculator
Enter your revenue and cost of goods sold to see gross profit, gross margin %, and markup instantly. Then find the price you need to hit a target margin.
How the gross margin calculator works
Gross margin shows how much of every sales dollar is left after the direct cost of what you sold. It is the first number to check when you set prices, because every other expense has to be paid out of it.
The formulas
Example with the default numbers: revenue $10,000 and COGS $6,000 give gross profit of $4,000 and a gross margin of 40%. The markup on cost is 66.67%. To earn a 50% margin on that same $6,000 cost you would need revenue of $12,000.
New to the difference between margin and markup? Read our guide to markup vs margin, or use the small business pricing calculator.
Free Excel version with a margin and markup converter
Want the full walkthrough with examples? Read the gross profit margin formula guide.
Profit margin calculator: gross, operating and net
Looking for a profit margin calculator? Gross margin only subtracts direct costs. Enter your operating expenses and interest and taxes below to see operating and net profit margin too. Sample numbers are illustrative.
Net profit margin = (revenue – COGS – operating expenses – interest and taxes) / revenue x 100. With the sample numbers: $100,000 – $60,000 – $25,000 – $5,000 = $10,000 net profit, a 10% net margin.
Frequently asked questions
What is gross margin?
Gross margin is the share of revenue left after the direct cost of the goods or services you sold. Gross margin % = (revenue – COGS) / revenue x 100.
What is the difference between gross margin and markup?
Margin is profit as a percent of the selling price. Markup is profit as a percent of cost. A 50% markup equals a 33.3% margin, so the two are never the same number.
Does gross margin include operating expenses like rent and salaries?
No. Gross margin only subtracts direct costs (COGS). Rent, marketing and admin salaries come out later and affect operating margin and net margin.
What counts as cost of goods sold (COGS)?
Costs directly tied to making or delivering what you sold: materials, direct labor, freight-in and production supplies. Overhead that does not change with each sale is usually not COGS.
What is a good gross margin?
It depends heavily on the industry, so compare against businesses like yours rather than one universal number. Use the calculator’s target price section to see what margin your pricing needs.
Is this calculator financial advice?
No. It is an educational estimate that depends entirely on the numbers you enter.
Need a custom pricing or financial model built for your business?
More free tools: Free Excel templates · Break-even calculator · All free calculators
Estimates only. Results depend on the numbers you enter and are not financial, tax or legal advice.