Evaluate your business profitability instantly. Calculate gross profit, margin percentage, and markup to optimize your pricing strategy.
Understanding your profitability is the first step toward building a sustainable business. Our Gross Margin Calculator provides instant clarity on your product pricing and financial health. Whether you are a retailer, a freelancer, or a manufacturing giant, knowing the difference between what you spend and what you earn is vital.
Gross margin is a financial metric that represents the percentage of revenue that exceeds the Cost of Goods Sold (COGS). It tells you how much of every dollar of sales you actually keep to cover your operating expenses and net profit. Unlike net profit, which accounts for all expenses (rent, marketing, salaries), gross margin focuses strictly on the direct costs of production or acquisition.
One of the most common mistakes in business is using margin and markup interchangeably.
Our tool calculates both simultaneously, ensuring you never underprice your products again.
If your margins are lower than industry standards, consider these strategies:
A "good" margin varies by industry. Software companies often have margins above 80%, while grocery stores might operate on 5-10% margins. Compare your results against industry benchmarks to see how you stack up.
Generally, gross margin is calculated using revenue and COGS before income taxes. However, direct sales taxes or duties that are part of the cost of acquiring goods should be included in the COGS.
You should review your margins at least quarterly, or whenever your supplier costs change. Frequent monitoring allows you to adjust prices before a dip in profitability becomes a crisis.