Free gross margin calculator 2026. Calculate gross profit margin from revenue and COGS. See markup %, industry benchmarks (retail, SaaS, grocery), and break-even point instantly.
Choose your calculation mode: "From Revenue & COGS" for direct calculation, "From Revenue & Margin %" to find COGS, or "From COGS & Margin %" to find required revenue.
Enter your revenue (total sales or selling price) and cost of goods sold (COGS). COGS includes direct costs like materials, labor, and manufacturing expenses.
If using margin-based modes, enter the desired gross margin percentage — this represents what portion of revenue remains after covering direct costs.
Optionally, switch to multi-product mode to compare up to 5 products side by side by adding additional products with their own revenue and COGS.
Click "Calculate" to see your gross profit, gross margin percentage, visual bar chart comparison, and detailed product breakdown.
Review the worked examples below to see how gross margin varies across SaaS, retail, restaurant, and manufacturing businesses.
Gross margin measures the percentage of revenue that exceeds the cost of goods sold (COGS). It shows how efficiently a company produces and sells its products. A higher gross margin means more money is available to cover operating expenses, marketing, R&D, and generate net profit. For example, if a product sells for $100 and costs $60 to produce, the gross margin is (($100 - $60) / $100) × 100 = 40%. This means for every dollar of revenue, $0.40 remains after covering direct production costs. Gross margin differs from markup: markup is calculated on cost, while gross margin is calculated on revenue.
A SaaS company with $500,000 in annual revenue and $150,000 in COGS (hosting, support staff, and direct costs). Gross Profit = $500,000 - $150,000 = $350,000. Gross Margin = ($350,000 / $500,000) × 100 = 70%. This 70% gross margin is typical for software companies where the cost to serve each additional customer is relatively low.
A retail clothing store with $200,000 in annual revenue and $130,000 in COGS (cost of inventory purchased). Gross Profit = $200,000 - $130,000 = $70,000. Gross Margin = ($70,000 / $200,000) × 100 = 35%. This 35% gross margin means the store retains 35 cents of each sales dollar after covering the cost of goods.
A restaurant with $300,000 in annual revenue and $210,000 in COGS (food ingredients, beverages, and kitchen supplies). Gross Profit = $300,000 - $210,000 = $90,000. Gross Margin = ($90,000 / $300,000) × 100 = 30%. Restaurants typically operate on thin gross margins (25-35%), making efficient cost management critical.
A manufacturer with $1,000,000 in annual revenue and $700,000 in COGS (raw materials, direct labor, factory overhead). Gross Profit = $1,000,000 - $700,000 = $300,000. Gross Margin = ($300,000 / $1,000,000) × 100 = 30%. Manufacturing gross margins vary widely by sub-sector.
A consulting firm with $400,000 in annual revenue and $160,000 in COGS (subcontractor labor, project materials). Gross Profit = $400,000 - $160,000 = $240,000. Gross Margin = ($240,000 / $400,000) × 100 = 60%. Professional services firms typically have high gross margins (50-70%) because their main input is labor.
A store sells 3 products: Product A (revenue $50, COGS $20, margin 60%), Product B (revenue $80, COGS $40, margin 50%), Product C (revenue $120, COGS $90, margin 25%). Total revenue = $250, total COGS = $150, total gross profit = $100, blended margin = $100 / $250 × 100 = 40%. The blended figure masks Product C's low 25% margin.
Find answers to the most common questions about gross margin calculator.
Gross margin (also called gross profit margin) is a financial metric that shows the percentage of revenue remaining after subtracting the cost of goods sold (COGS). It represents the profit a company makes on its core business activities before accounting for operating expenses like rent, salaries, marketing, and taxes. Gross margin is calculated as (Revenue - COGS) / Revenue × 100%. It is a key indicator of a company's pricing strategy, production efficiency, and financial health.
Gross margin only accounts for direct costs (COGS) — the cost of producing or purchasing the goods you sell. Net margin (also called net profit margin) accounts for all expenses, including operating expenses (rent, salaries, utilities), interest, taxes, and depreciation. Net margin = (Net Income / Revenue) × 100%. A company might have a healthy gross margin of 60% but a net margin of only 10% if operating expenses consume a large portion of revenue.
COGS includes all direct costs involved in producing or acquiring the goods and services you sell. For a manufacturer, this includes raw materials, direct labor, factory overhead, and packaging. For a retailer or wholesaler, COGS is typically the purchase price of inventory plus freight and import duties. For a service business, COGS may include direct labor costs, materials used in service delivery, and subcontractor fees. COGS does NOT include indirect costs like marketing, office rent, administrative salaries, insurance, or utilities.
Gross margins vary dramatically by industry. Software/SaaS companies typically enjoy 70-85% gross margins because the cost to serve additional customers is very low. Retail generally sees 25-50% margins (grocery stores on the lower end, specialty retailers on the higher end). Restaurants operate on thin 25-35% margins due to high food and labor costs. Manufacturing ranges from 20-40%. Pharmaceuticals can achieve 60-80% margins. Construction is typically 15-30%. Technology hardware ranges from 20-40%. Consulting firms average 50-70%.
There are three main ways to improve gross margin: (1) Increase prices — even small price increases can significantly improve margins if demand is relatively inelastic. A 5% price increase on a 30% margin product boosts gross profit by 16.7%. (2) Reduce COGS — negotiate better supplier rates, improve production efficiency, reduce waste, or find cheaper materials without sacrificing quality. (3) Shift product mix toward higher-margin products — analyze which products have the best margins and focus sales and marketing efforts there.
While often confused, gross margin and markup are different calculations. Gross margin is calculated as a percentage of revenue: (Revenue - COGS) / Revenue × 100%. Markup is calculated as a percentage of cost: (Revenue - COGS) / COGS × 100%. For example, if you buy a product for $50 and sell it for $100, your markup is (($100 - $50) / $50) × 100 = 100%, but your gross margin is (($100 - $50) / $100) × 100 = 50%. A 100% markup equals a 50% gross margin.
Gross margin = markup / (1 + markup). Markup = gross margin / (1 - gross margin). Examples: 25% margin = 33.3% markup; 33.3% margin = 50% markup; 50% margin = 100% markup (keystone); 60% margin = 150% markup; 75% margin = 300% markup. The conversion is non-linear — doubling markup does not double margin. Always know which metric your pricing system uses: QuickBooks Online defaults to margin, while many POS systems default to markup.
Gross profit is the dollar amount: Revenue - COGS. Gross margin is the percentage: (Revenue - COGS) / Revenue × 100. A $50 gross profit on $100 revenue equals a 50% gross margin. Use gross profit when comparing absolute dollar amounts (across products or periods), and use gross margin when comparing profitability ratios. Investors and analysts use gross margin almost exclusively because it normalizes for revenue size.
Calculations and computational models on QuickBizCalc are verified against published regulatory standards and statutory tax tables:
Publication 15-T (Federal Income Tax Withholding Methods) & Publication 15 (Employer's Tax Guide).
Fair Labor Standards Act (FLSA 29 U.S.C. § 207) regulations on overtime hours, recordkeeping, and minimum wage.
OASDI taxable maximum wage base limits and statutory FICA tax rates (6.2% Social Security + 1.45% Medicare).
Formulas and worked examples are checked against the sources above before publishing. For advice on your own situation, consult a licensed tax professional or accountant.
