Gross Margin Calculator
Calculate gross margin percentage and gross profit from revenue and cost of goods sold (COGS).
Essential for pricing and profitability analysis.
Gross Margin
Gross Margin measures the percentage of revenue remaining after subtracting the cost of goods sold (COGS).
Gross Profit = Revenue - COGS
Gross Margin % = (Gross Profit / Revenue) × 100
Gross margin vs. markup:
- Gross Margin: profit as a percentage of selling price
- Markup: profit as a percentage of cost
- A 50% markup = 33.3% margin
Healthy gross margins by industry:
- Software/SaaS: 70–90%
- Retail clothing: 45–65%
- Restaurants: 60–70% (food cost 30–40%)
- Manufacturing: 25–35%
- Grocery: 25–30%
Why it matters:
- Gross margin must cover all operating expenses (rent, salaries, marketing)
- If gross margin is shrinking, costs are rising faster than prices
- Compare against industry benchmarks to evaluate competitiveness