Gross Margin Calculator
Calculate Gross Margin step by step: Gross margin % = (net revenue − COGS) ÷ net revenue × 100.
In short
Formula: Gross margin % = (net revenue − COGS) ÷ net revenue × 100.
What this calculator does
Calculate Gross Margin step by step: Gross margin % = (net revenue − COGS) ÷ net revenue × 100. Worked example, questions and limitations included.
Use it to turn Currency (symbol only, never converted), Net revenue, Cost of goods sold into a checked result you can compare, copy, or rerun with different assumptions.
The page shows the formula, a numeric worked example, and the assumptions that affect this accounting & costing calculation.
Inputs and what they mean
- Currency (symbol only, never converted)
- — choice value.
- Net revenue
- — number value.
- Cost of goods sold
- — number value.
How to use it
- Enter each value in the unit shown next to the box (use the unit converter first if your numbers are in other units).
- Check the breakdown to see every intermediate step.
- Read the limitations before relying on the result.
Formula
Gross profit ratio as defined in OpenStax Principles of Accounting Vol. 1.
Margin is measured against revenue, not against cost.
Markup is profit as a share of cost: (price − cost) ÷ cost. Margin is profit as a share of price: (price − cost) ÷ price. The same sale always has a higher markup than margin — 50% markup is only 33.33% margin.
Gross margin % = (net revenue − COGS) ÷ net revenue × 100.
Inputs used: Currency (symbol only, never converted), Net revenue, Cost of goods sold.
Worked example
Annual sales
- Gross profit = $50,000.
- 50,000 ÷ 120,000 × 100 = 41.67%.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
- Revenue must be above zero.
- No industry benchmarks are built in.
- Results are educational estimates built only from the figures you enter. They are not personalised investment, tax, legal or accounting advice. Rates, growth and discount assumptions are always yours to choose.
- The result depends on the values you enter for this gross margin calculator; it does not supply missing rates, rules, prices, dates, or assumptions for you.
Common questions
What is a good gross margin?
It depends entirely on the industry and business model. We do not supply a benchmark.
Can margin be over 100%?
No. Margin cannot exceed 100% because profit cannot exceed revenue. Markup can exceed 100%.
How do I turn a margin into a price?
Use the target margin pricing calculator: price = cost ÷ (1 − margin). Check the formula, example, and limitations on this page before using the result for a real accounting & costing decision.
How do I use the Gross Margin Calculator?
Enter the required values for Currency (symbol only, never converted), Net revenue, Cost of goods sold. The calculator applies the formula on this page and shows the main result with any supporting breakdown so you can check the arithmetic.
What formula does the Gross Margin Calculator use?
Gross margin % = (net revenue − COGS) ÷ net revenue × 100. The visible formula section above lists the calculation path and the edge cases the page handles, so the result can be checked without relying on the form alone.
Can the Gross Margin Calculator be used for exact decisions?
Use it as a calculation aid, not as a substitute for checking the underlying rule, contract, policy, or professional advice that applies to your situation. When a result depends on local rules, personal details, prices, or dates, enter those values yourself and confirm them before acting.
Related tools
Calculate COGS step by step: COGS = beginning inventory + purchases − ending inventory.
Calculate Gross Profit step by step: Gross profit = net revenue − cost of goods sold.
Calculate Contribution Margin Ratio step by step: Contribution margin ratio = (sales − variable costs) ÷ sales × 100.
Calculate Break-Even Revenue step by step: Break-even revenue = fixed costs ÷ contribution margin ratio.
Calculate Target Profit step by step: Target units = (fixed costs + target profit) ÷ (price − variable cost per unit), rounded up to a whole unit.
Calculate Margin of Safety step by step: Margin of safety % = (actual sales − break-even sales) ÷ actual sales × 100.