Free Gross Margin Calculator
Gross margin measures how efficiently you turn revenue into profit before paying for anything else. It's the first line of any healthy P&L review.
Results
About the Gross Margin Calculator
The gross margin formula
Gross Margin = (Revenue − COGS) / Revenue × 100. COGS includes anything directly tied to producing what you sold: raw materials, direct labour, packaging, per-order shipping. It excludes rent, marketing and salaries not tied to production.
Why gross margin matters more than revenue
A business doing $1M in revenue at 15% gross margin has $150K to cover every other expense. A business doing $500K at 60% has $300K. Gross margin is the ceiling on everything you can afford — rent, marketing, salaries, profit.
Improving gross margin
Three levers: raise prices (highest impact), renegotiate supplier costs, or shift mix toward higher-margin products. Cutting production waste has smaller but compounding effects.
Frequently asked questions
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