Gross Margin Calculator
Calculate your gross margin and gross profit from revenue and cost of goods sold.
Gross Margin Calculator
Calculate your gross margin and gross profit from revenue and cost of goods sold.
Real-World Examples
Revenue: $500,000, COGS: $350,000
Gross margin: 30%, Gross profit: $150,000
Revenue: $200,000, COGS: $40,000
Gross margin: 80%, Gross profit: $160,000
Revenue: $85,000, COGS: $59,500
Gross margin: 30%, Gross profit: $25,500
Common Mistakes to Avoid
Including operating expenses in COGS
Fix: COGS includes only direct production costs like materials and direct labor. Rent, marketing, and admin salaries are operating expenses, not COGS, and are excluded from gross margin.
Confusing gross margin with net margin
Fix: Gross margin only removes COGS. Net margin removes all expenses. A 60% gross margin can still produce a net loss if operating expenses are high.
Comparing gross margins across different industries
Fix: Gross margin varies widely by industry. Software often exceeds 80% while retail sits around 20-30%. Benchmark against peers in your own sector, not across sectors.