Gross Profit Margin Calculator
Calculate gross profit margin instantly. Enter revenue and COGS to see what percentage of each sale you keep. Free tool for any currency.
What Is Gross Profit Margin Formula?
Gross profit margin shows what percentage of your revenue remains after paying for the direct costs of making or buying your products. It is the first and most important profitability metric for any product-based business — telling you whether your pricing is fundamentally sound before any other expenses are considered.
Who Needs to Track Gross Margin?
E-commerce store owners, retail managers, wholesale directors, and manufacturing executives use gross margin to evaluate product pricing, negotiate with suppliers, and identify which products are most profitable.
How to Calculate Gross Profit Margin Step-by-Step
1. Enter total sales revenue. 2. Enter direct Cost of Goods Sold (COGS). 3. Click Calculate to view your gross profit and gross margin percentage.
What's a Good Gross Profit Margin by Industry?
A higher gross margin means more revenue is available to cover operating costs and generate profit. Software companies typically achieve 70–80%+, e-commerce stores 25–50%, and grocery retailers around 20–25%. Compare your result to your industry average to see where you stand.
Frequently Asked Questions
Q: What is the formula for gross profit margin?
A: Gross Margin % = [(Revenue − COGS) ÷ Revenue] × 100.
Q: What costs belong in COGS?
A: COGS includes raw materials, direct manufacturing labor, packaging, and inbound freight. It excludes rent, marketing, and office salaries.
Q: What is a healthy gross profit margin for retail?
A: Retail stores generally aim for 40% to 50% gross margin, while SaaS companies frequently achieve 75% to 85%.