Gross Margin Calculator
Enter a selling price and the cost of goods sold to find your gross margin — and the equivalent markup, side by side.
On $100.00 of revenue with $60.00 of cost, the profit is $40.00. That's a gross margin of 40.00% — and an equivalent markup of 66.67%.
Results update as you type.
Formula
Gross margin is profit as a percentage of revenue:
margin% = (revenue − cost) / revenue × 100.
The same gap expressed as markup divides by cost instead:
markup% = (revenue − cost) / cost × 100.
For a profitable product, markup is always the larger of the two — they only equal at zero.
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Frequently asked questions
Margin vs markup — what's the practical difference?▾
Margin divides profit by revenue; markup divides profit by cost. A $40 profit on a $100 sale (cost $60) is a 40% margin and a ~67% markup. Same dollars, two ways of expressing the spread. Retail uses markup ('keystone' = 100% markup = 50% margin); accounting reports margin. Don't apply a margin number where you mean markup — you'll under-price every time.
Is this gross margin or operating margin?▾
Gross. The formula is (revenue − COGS) / revenue, deducting only the direct cost of what you sold. Operating margin is gross profit minus operating expenses (salaries, rent, marketing, R&D); net margin further deducts interest and tax. A healthy 40% gross margin might still leave a 5–10% net margin once overhead is paid.
What's a normal margin in my industry?▾
It varies enormously. SaaS: 70–85% gross margin. Restaurants: ~70% on food, far less after labor. Grocery: 20–30%. Apparel retail: 50–60%. Auto manufacturing: 15–25%. Compare to your industry's median (NYU's Damodaran data is a public source) before deciding whether your margin is healthy.
Does this account for sales tax?▾
No — enter pre-tax figures. Sales tax in the US is a pass-through: you collect it from the customer and remit it to the state, so it's neither revenue nor a cost. If you accidentally include sales tax in your revenue figure, your gross margin will look slightly higher than it really is.
How do I price for a target margin?▾
Price = cost / (1 − margin%/100). For 40% target margin on $60 cost: 60 / 0.60 = $100. The Markup Calculator handles the same problem from the other direction (cost + target markup → price).