Calculate gross margin, gross profit, and markup from revenue and cost of goods sold (COGS). Essential for pricing and profitability analysis.

Gross Profit: $40,000.00
Gross Margin: 40.00%
Markup: 66.67%
COGS Ratio: 60.00%
Revenue: $100,000.00
COGS: $60,000.00

Formula: Gross Profit = Revenue − COGS. Gross Margin = Gross Profit ÷ Revenue × 100%. Higher margin indicates better profitability.

What is Gross Margin?

Gross margin is the percentage of revenue that remains after deducting the cost of goods sold (COGS). It measures how efficiently a company uses its resources to produce goods and indicates the financial health of a business .

Gross Margin = (Revenue − COGS) ÷ Revenue × 100%

Gross Profit is the absolute dollar amount (Revenue − COGS), while Gross Margin expresses this as a percentage of revenue. Both are essential for pricing, profitability analysis, and benchmarking against competitors .

Interpretation guide:

• > 50% — Excellent, very strong profitability
• 40% – 50% — Great, strong profitability
• 30% – 40% — Good, healthy profitability
• 20% – 30% — Moderate, average profitability
• 10% – 20% — Low, limited profitability
• < 10% — Very low, high risk

Typical gross margins by industry :

• Software: 70–90%
• Retail: 20–40%
• Manufacturing: 25–50%
• Food & beverage: 20–35%
• Construction: 15–30%

How to Use This Calculator

1. Enter Revenue: Total sales or income from goods/services.
2. Enter COGS: Direct costs of producing goods (materials, labor, manufacturing overhead).
3. Calculate: Click “Calculate Gross Margin” or press Enter.
4. Interpretation: Results show gross profit, gross margin, markup, and COGS ratio. Use the margin to evaluate pricing and efficiency .