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Business Gross Margin

Calculate gross margin from revenue and cost of goods sold.

About Business Gross Margin

Gross profit is revenue minus COGS, and gross margin expresses it as a percentage of revenue. Gross margin is the first screen for pricing and efficiency, and changes here move the bottom line fast.

Formula

Business Gross Margin

Gross margin = (revenue - COGS) / revenue x 100

COGS
Direct costs of producing what was sold

Worked example

With the default values below, Business Gross Margin returns Gross Margin of 45.0%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total revenue
150,000
Cost of goods sold
82,500

Results

Gross Profit
$67,500
Gross Margin
45.0%
Cost of Revenue Ratio
55.0%

Step by step

  1. 1Values used
  2. 2Business Gross Margin
  3. 3Gross Margin= 45.0
  4. 4Gross Profit= 67,500
  5. 5Cost of Revenue Ratio= 55.0

Assumptions and limits

  • The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 1 decimal place, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Business Gross Margin calculated?

Gross margin = (revenue - COGS) / revenue x 100 Gross profit is revenue minus COGS, and gross margin expresses it as a percentage of revenue.

Why does Business Gross Margin matter?

Gross margin is the first screen for pricing and efficiency, and changes here move the bottom line fast.

What values do I need to enter?

This calculator takes 2 inputs: Total revenue, Cost of goods sold. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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