Ecommerce & profit
Gross Margin Calculator
Calculate the revenue share left after cost of goods sold, before operating expenses.
Use gross margin for direct product economics. It is intentionally narrower than the existing profit margin, which deducts the complete supplied expense total.
What the result means
A 60% result means 60% of revenue remains after direct goods costs. It does not pay for operating expenses, advertising, interest, or tax.
The formula
((Net revenue - cost of goods sold) / net revenue) * 100
Results are displayed to at most two decimal places. Calculations use the unrounded inputs.
A worked example
Put the formula to work
- Net revenue (currency)
- 50,000
- Cost of goods sold (currency)
- 20,000
Gross margin percentage: 60%
Revenue of 50,000 less 20,000 in direct goods cost leaves 30,000 gross profit, or a 60% gross margin.
How to use this calculator
- Choose a revenue period and matching direct-cost scope.
- Exclude operating expenses that are not direct goods costs.
- Subtract cost of goods sold from revenue.
- Divide gross profit by revenue and express it as a percentage.
Why this number matters
Gross margin isolates direct delivery economics so product mix and pricing changes can be reviewed before overhead.
Input definitions
- Net revenue (currency)
- Net revenue for the same period as the goods cost; exclude pass-through taxes and refunds.
- Cost of goods sold (currency)
- Direct product or service delivery costs included in gross profit; exclude marketing and overhead.
Assumptions and limitations
- Direct-cost classification differs by business model and accounting policy.
- It is not net profit margin and does not include operating overhead.
- A blended result can conceal low-margin products or services.
Methodology
The default result and worked example use the same calculation functions as the interactive tool. The formula cannot verify the quality or scope of your source data.
Read our calculation methodology
Last updated .