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Gross Margin Calculator

Calculate gross margin, gross profit and markup from revenue and cost of goods sold (COGS), with optional per-unit figures.

What this tool does

Calculate gross margin, gross profit and markup from revenue and cost of goods sold (COGS), with optional per-unit figures. You fill in these fields: Revenue, Cost of goods sold (COGS), and Units sold (optional). Some fields are optional. It shows gross margin, gross profit, markup, revenue per unit, COGS per unit, and gross profit per unit.

Inputs

  • Revenue (USD): A number. Must be greater than 0. Total sales for the period.
  • Cost of goods sold (COGS) (USD): A number. Must be greater than 0. Direct costs of the goods sold, such as materials and direct labor.
  • Units sold (optional) (units): A whole number. Must be greater than 0. Add this to see figures per unit.

How to use

  1. Enter the revenue in USD.
  2. Enter the cost of goods sold (COGS) in USD.
  3. Enter the units sold (optional) in units.
  4. Read the result: gross margin, gross profit, markup, revenue per unit, COGS per unit, and gross profit per unit. It appears once every required field has a valid value.

Worked examples

Example 1. Inputs:

  • Revenue: 50,000 USD
  • Cost of goods sold (COGS): 30,000 USD

Results:

  • Gross margin: 40.00% (Gross profit as a share of revenue)
  • Gross profit: $20,000.00 (Revenue minus COGS)
  • Markup: 66.67% (Gross profit as a share of COGS)

How this is worked out: Gross profit = 50000 - 30000 = 20000. Margin = 20000 / 50000 × 100 = 40 percent. Markup = 20000 / 30000 × 100 = 66.6667 percent.

Example 2. Inputs:

  • Revenue: 2,000 USD
  • Cost of goods sold (COGS): 1,400 USD

Results:

  • Gross margin: 30.00% (Gross profit as a share of revenue)
  • Gross profit: $600.00 (Revenue minus COGS)
  • Markup: 42.86% (Gross profit as a share of COGS)

How this is worked out: Gross profit = 2000 - 1400 = 600. Margin = 600 / 2000 × 100 = 30 percent. Markup = 600 / 1400 × 100 = 42.8571 percent (3/7 = 0.428571...).

Example 3. Inputs:

  • Revenue: 100 USD
  • Cost of goods sold (COGS): 120 USD

Results:

  • Gross margin: -20.00% (Gross profit as a share of revenue)
  • Gross profit: -$20.00 (Revenue minus COGS)
  • Markup: -16.67% (Gross profit as a share of COGS)
  • Note: COGS is higher than revenue, so this sale makes a loss.

How this is worked out: Gross profit = 100 - 120 = -20. Margin = -20 / 100 × 100 = -20 percent. Markup = -20 / 120 × 100 = -16.6667 percent. A negative result shows a sale below cost.

Limitations

  • Uses only revenue and cost of goods sold. Operating expenses, taxes and other costs are not included.
  • Revenue and COGS must both be greater than zero.
  • Does not apply inventory valuation methods such as FIFO or LIFO. Enter the cost you have already worked out.

FAQs

Q: What is the difference between gross margin and markup?
A: Gross margin is the profit as a share of the selling price. Markup is the profit as a share of the cost. The same sale gives a different percentage for each, so check which one you are reading.
Q: Does this subtract operating expenses?
A: No. Only revenue and cost of goods sold are used. Rent, wages, marketing and other operating costs are not deducted.
Q: What do the per-unit figures show?
A: If you enter the number of units sold, the tool divides revenue, COGS and gross profit by that number to show the amount for one unit.
Q: Why must COGS be above zero?
A: Markup divides by the cost, so a cost of zero cannot be calculated. Enter a cost above zero to get a result.

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