Gross Margin Calculator
Calculate gross margin percentage from revenue and cost of goods sold.
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Gross Margin Fundamentals
Gross margin measures the percentage of revenue remaining after subtracting the direct cost of producing goods or services (COGS). Gross Margin = (Revenue - COGS) ÷ Revenue × 100. It reveals how efficiently a company produces its core product. Software companies often have 80-90% gross margins (low production costs). Retailers: 25-50%. Restaurants: 60-70%. Manufacturing: 20-40%.
Gross margin is the first profitability checkpoint. If gross margin is negative, the business loses money on every unit sold — no amount of scaling fixes that. Track the full profitability picture with our Net Margin and Profit Margin calculators.
People Also Ask
What is a good gross margin?
Varies hugely: Software 80-90%, Retail 25-50%, Manufacturing 20-40%, Restaurants 60-70%. Compare against industry peers, not across industries.
Gross margin vs markup?
Gross margin is profit as % of revenue. Markup is profit as % of cost. A $100 item costing $60: gross margin = 40%, markup = 67%. See our Margin vs Markup Calculator.
How do I improve gross margin?
Negotiate lower supplier costs, improve production efficiency, raise prices, or shift product mix toward higher-margin items.