Gross Margin Calculator
Calculate your gross margin, gross profit, and markup percentage instantly. Enter your revenue and cost of goods sold to understand your profitability at the product level and compare to industry benchmarks.
Gross margin is one of the most important profitability metrics for any business. It measures the percentage of revenue that remains after subtracting the direct costs of producing or acquiring the goods sold (COGS). The formula is: Gross Margin = (Revenue - COGS) / Revenue x 100.
Gross margin differs from markup, though both measure profitability. Gross margin expresses profit as a percentage of the selling price, while markup expresses profit as a percentage of the cost. For example, if you buy a product for $60 and sell it for $100, your gross margin is 40% ($40/$100) but your markup is 66.7% ($40/$60). Both numbers describe the same profit -- they just use different bases.
Industry benchmarks vary significantly. Software companies often have gross margins of 70-90%, retail typically ranges from 25-50%, and manufacturing from 25-35%. Comparing your gross margin to industry averages helps identify pricing issues or cost inefficiencies. A declining gross margin over time may signal rising costs, increased competition, or the need to adjust pricing strategy.