Gross Profit Margin Calculator
Enter revenue and the cost of the goods or services sold over the same period. You get gross profit, gross margin and the markup on cost, plus the revenue a target margin would need on the same cost. Nothing is sent anywhere.
In one sentence: Gross margin is the share of revenue left after the direct cost of what you sold, before overheads.
Formula: gross profit = revenue − cost of goods sold; margin = gross profit ÷ revenue × 100; markup = gross profit ÷ cost × 100; revenue for a target margin = cost ÷ (1 − target %).
What counts as cost of goods sold
Cost of goods sold, or cost of sales for a service business, is the cost that rises and falls with what you sell: materials, stock bought for resale, direct labour on the product or service, manufacturing or fulfilment, and payment processing if you treat it as direct. It excludes rent, salaries of people not producing the work, marketing, software and other overheads, which come off later to give operating profit. Drawing the line consistently matters more than drawing it perfectly, because gross margin is mostly used to compare periods and products.
Margin is not markup
A 40% gross margin and a 40% markup are different numbers from the same sale. Margin is profit as a share of the selling price; markup is profit as a share of cost. Twenty thousand profit on fifty thousand revenue is a 40% margin and a 66.67% markup. Suppliers and retailers often talk in markup while accountants and lenders talk in margin, and quoting one when the other is expected overstates or understates profit by a wide amount. The markup and margin calculator converts between them for a single price.
Using the target line
The last line answers a practical question: with the same cost of sales, what revenue would a higher margin need? It is the price increase, in total, that gets you there without changing costs. If that revenue is unrealistic, margin has to come from the cost side instead. Gross margin feeds straight into the break-even calculator, where it is the contribution that covers fixed costs, and into the net profit margin calculator, which continues the walk down to net profit.
Frequently asked questions
Is gross margin before or after VAT or sales tax?
Use revenue and costs excluding tax you collect or reclaim; the tax is not yours.
Can gross margin be negative?
Yes. If cost of sales exceeds revenue you lose money on every sale before overheads, and the margin shows as a negative percentage.
Is my data stored?
No. Everything runs in your browser.