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Gross Margin Calculator: Revenue Minus the Direct Cost of Goods

A ledger and calculator under a warm desk lamp at night — business money calculators

Gross margin answers the most basic question in a business: after the direct cost of making or buying what you sell, is the sale itself profitable? It is the first number investors, buyers and accountants ask for, because it shows whether the core transaction works before any overhead is even mentioned. This calculator takes your revenue and your true cost of goods sold and returns the gross profit, the margin percentage, and the markup the price implies — with a reminder about what belongs in COGS and what does not, because the honesty of that split decides whether the number tells the truth.

⚡ Free instant check

See exactly what your revenue leaves after the direct cost of goods — the gross profit that has to pay for everything else you do.

❓ Gross Margin Calculator — FAQ

What belongs in cost of goods sold?

Direct costs only: materials, packaging, freight in, direct production labour and transaction fees. Rent, marketing and salaries are overheads — counting them in COGS makes your margin look worse and hides where money actually goes.

What is a good gross margin for my industry?

It varies enormously: software often runs 80%+, physical products 30-60%, groceries under 25%. Compare against your own industry's typical range before judging, and watch the trend month to month.

What does gross profit pay for?

Everything else: rent, wages, marketing, software, taxes, and your own income. If gross profit does not cover overheads, no amount of sales effort fixes it — the price or the cost structure has to change.

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