Gross Margin Calculator
Calculate gross profit and gross margin from revenue and COGS. Free profitability calculator for small business pricing and cost analysis. Try it now, no sign-up.
Inputs
Enter the minimum numbers needed to get a result.
Formula and example
Gross margin = (Revenue - COGS) / Revenue x 100
If revenue is $1,000 and COGS is $620, gross profit is $380 and gross margin is 38%.
Methodology & assumptions
Last updated: 2026-06-10Calculation method
Calculates gross profit and gross margin from revenue and cost of goods sold. Assumes COGS includes all direct production costs. Does not deduct operating expenses or overhead.
Data sources
Uses the numbers you enter and standard small-business finance formulas. Benchmark comparisons use HustleFin industry benchmark pages where available.
Limitations
Only reflects direct costs. Does not account for indirect overhead, period costs, or taxes. Service businesses should map direct labor to COGS.
Input definitions
- Revenue: Sales revenue for the product, order, or period.
- Cost of goods sold: Direct costs tied to producing or delivering the sale.
Frequently asked questions
What is gross margin?+
Gross margin is the percentage of revenue left after subtracting direct costs, usually cost of goods sold.
How is gross margin different from profit margin?+
Gross margin focuses on direct costs. Profit margin can include more costs, such as overhead, operating expenses, or project costs.
Why does gross margin matter?+
It helps owners see whether pricing leaves enough room to cover overhead and still earn profit.
Can service businesses use gross margin?+
Yes. Use revenue and the direct labor or delivery costs tied to that service.
Related guides
Go deeper with in-depth guides on the concepts behind this calculator.
Continue the workflow
Estimate margin, convert margin to markup, then check the sales volume needed to break even.