Business

Gross Margin Calculator

Work out gross margin from revenue and direct cost of goods or delivery costs.

Last reviewed: April 30, 2026Free toolMethodology

Gross Margin Calculator

These fields start with sample inputs. Keep them or replace them, then run the tool to show a fresh result.

Number fields accept plain values and common formatted input such as 250000, 250,000, or 1,234.56.

Result

Calculating the sample result.

Why it matters

Gross margin tells you how much room is left to cover overhead, marketing, salaries, and profit after direct fulfillment costs are paid.

When to use

  • Reviewing product, channel, or customer profitability
  • Checking whether discounts still leave enough room for overhead
  • Comparing wholesale and direct-to-consumer economics

Inputs & Outputs

Inputs

  • Revenue is the total sales amount for the period or order being analyzed.
  • Cost of goods sold should include the direct cost tied to producing or delivering that revenue.

Outputs

  • Gross margin percentage shows the share of revenue retained after direct costs.
  • Gross profit shows the absolute amount retained before overhead.

Gross margin calculation

Subtract direct costs from revenue to get gross profit. Divide gross profit by revenue to express the margin as a percentage.

Gross margin = ((revenue - COGS) / revenue) x 100

Worked example

1

Wholesale order check

A 50,000 order has 31,000 in direct product and freight cost.

Inputs

  • Revenue: 50,000
  • COGS: 31,000

Steps

  • Gross profit = 50,000 - 31,000 = 19,000
  • Gross margin = 19,000 / 50,000 = 38%

Result

  • The order carries a 38% gross margin and 19,000 in gross profit.

Edge cases & caveats

  • Gross margin does not include overhead or operating expenses.
  • Channel fees and refunds can materially change the result if omitted.

Frequently Asked Questions

Is gross margin the same as markup?

No. Gross margin compares profit to revenue, while markup compares profit to cost. The percentages are not interchangeable.

Should shipping be included in COGS?

If shipping is a direct fulfillment cost for the order or product line, include it so gross margin reflects real unit economics.

Keep going

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