Gross Margin Calculator

Gross margin measures how much of each revenue dollar remains after direct costs of delivering the product or service. It sits above operating expenses on the income statement.

Use it for one period or one product line where “revenue” and “COGS” are clearly defined.

Gross margin

Revenue ($)

Cost of goods sold ($)

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How this is calculated

Gross profit = revenue − COGS. Gross margin % = gross profit ÷ revenue × 100 (when revenue > 0).

Example: revenue $220k, COGS $132k → gross profit $88k → margin 40%.

Use this tool for

• Manufacturing quotes where material and direct labor roll into COGS.
• SaaS COGS (hosting, support) vs. subscription revenue.
• Benchmarking a SKU before you load operating expenses.

Common questions

Is shipping COGS or opex?

Depends on your accounting policy—include it in COGS here only if that matches how you define gross margin internally.

Negative margin?

When COGS exceeds revenue, gross profit is negative and margin is negative—your inputs show a loss before operating expenses.