1. Home
  2. Tools
  3. Finance and pricing
  4. Gross Margin Calculator

Gross Margin Calculator

A quick gross margin calculator: enter revenue and cost of goods sold to get gross profit, gross margin and markup.

Free, no sign-upRuns in your browserFinance and pricing

Inputs

Net sales, or the selling price of one unit.
Direct costs only, such as materials, production and inbound freight.

Margin

-

Gross margin

Gross profit-
Markup over cost-
Cost as a share of revenue-

Gross margin shows your product economics

Gross margin is the share of each sale left after paying the direct cost of what you sold. A software product with a 70% gross margin works very differently from a retail product with a 25% margin. Margin decides how much you can afford to spend to win a customer, how much profit each unit brings in, and how much room you have for discounts and promotions.

How to calculate it

Gross profit is revenue minus cost of goods sold. Gross margin is gross profit divided by revenue. Markup is gross profit divided by cost. For example, $1,000 of revenue with $400 of cost gives $600 of gross profit, a 60% gross margin and a 150% markup. You can use totals for a period or the price and cost of a single unit.

Frequently asked questions

What should I include in cost of goods sold?

For physical products: materials, manufacturing and inbound freight. For SaaS: hosting, third-party APIs and support costs directly tied to usage. Leave out overhead like rent, salaries for non-production staff and marketing.

What is the difference between margin and markup?

Margin compares profit with the selling price, while markup compares it with cost. The same sale always has a higher markup than margin, so be clear which one you mean when setting prices.

What counts as a good gross margin?

It depends on the industry. Software businesses often run high margins, while retail and food businesses usually run much lower ones. Compare yourself with businesses like yours and track the trend over time.

Related tools

All tools
Markup CalculatorTurn a unit cost and markup percentage into a selling price, profit per unit and the matching gross margin.ROE CalculatorCalculate return on equity from net income and average shareholder equity to see how well a company turns capital into profit.Inventory Turnover CalculatorCompute your inventory turnover ratio and days of inventory on hand to see how fast stock turns into cash.Currency ConverterEstimate conversions between USD, CAD, EUR, GBP and JPY with rates you can edit. Good for pricing and budgets, not for settling payments.Revenue per Employee CalculatorCalculate revenue per employee and compare it with common benchmarks for a quick read on how productive your organization is.Hourly Rate CalculatorWork out the hourly rate you need as a freelancer or consultant to reach your take-home goal after taxes, expenses and unbillable time.