Gross Margin Calculator

Input accuracy

Are you using real, current numbers — not rough guesses that flatter the result?

Benchmark fit

Is your result healthy for your specific business model, not just positive?

Sensitivity

Which single input, if wrong, would change the result most?

Time horizon

Does this hold up over 12 months, or only at today's volume?

Next decision

What should change in the business because of this number?

Gross margin determines how much of each pound of revenue is left to fund everything else — product, acquisition, support and eventually profit. It is the structural reason two businesses at identical revenue can behave completely differently.

This calculator returns gross profit, margin percentage, and the equivalent markup, because those last two are routinely confused in ways that cost real money.

Free calculator

Calculate gross profit and margin, and see the markup equivalent — the two are routinely confused.

Revenue£

Cost of goods sold£

Results

Gross profit£70.0k

Gross margin70.0%

Equivalent markup233.3%

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Margin and markup are not the same

Buy for £100 and sell for £150 and your markup is 50%, but your margin is 33.3%. Margin is calculated against the selling price; markup against the cost. Pricing off the wrong one systematically undercharges.

This calculator shows both side by side so the difference is visible rather than assumed.

What belongs in cost of goods sold

Only costs that scale directly with delivering the product. For software that is hosting, third-party APIs, payment processing and directly attributable support. For physical products it is goods, fulfilment, shipping and returns.

Excluding awkward costs like returns or support inflates margin and makes the business look healthier than it is — usually right up until cash flow disagrees.

What margin makes possible

A business at 80% margin can spend heavily on acquisition and still recover it. One at 20% must acquire cheaply or depend on repeat purchases, because there is far less headroom per sale to pay for the customer.

How this calculator works

Enter total revenue for the period.
Enter cost of goods sold — direct delivery costs only.
The calculator returns gross profit, gross margin percentage, and equivalent markup.

Direct answer — Gross Margin Calculator

Calculate gross profit, gross margin percentage and the equivalent markup. Free gross margin calculator, no signup.

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Frequently asked questions

How do I calculate gross margin?

Gross margin % = (Revenue − Cost of Goods Sold) ÷ Revenue × 100. Enter your revenue and COGS above for the exact figure, plus the equivalent markup — the two are commonly confused and calculated differently.

What is a good gross margin?

It varies sharply by model: SaaS typically 70–85%, agencies and services 40–60%, ecommerce 20–50%. Judge yours against comparable businesses rather than across categories.

What is the difference between margin and markup?

Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. A 50% markup is only a 33% margin, which is why pricing off markup quietly undercharges.

Does gross margin include salaries?

Only salaries directly attributable to delivering the product, such as support staff. General salaries, marketing and rent are overheads and belong in operating expenses, below the gross margin line.

Last reviewed 8 August 2026