Gross Margin Calculator

Market demand

Are buyers already searching for this problem?

Competition

How crowded is the space for this exact outcome?

Execution

Can a focused team ship a credible first version quickly?

Revenue path

Is there a believable way to monetize early?

Customer clarity

Do you know exactly who owns this pain day to day?

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%

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

The Skip or Ship Idea Lifecycle System evaluates ideas with five consistent signals: market demand, competition intensity, execution difficulty, revenue potential, and customer clarity. Same inputs, same verdict — every time.

What to prove first

One buyer segment with recurring pain and a clear trigger to pay now. If that is vague, validation can't fix it.

What kills momentum

Generic ICPs, vague outcomes, and zero distribution plan. These collapse execution speed within weeks.

What to decide next

One channel, one wedge use case, one pricing hypothesis to test in the next 14 days.

Validate this idea before building

Move from idea generation into evidence-based validation with the core Skip or Ship Idea Lifecycle System. Free verdict, premium signal cards, no signup needed for the first run.

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Frequently asked questions

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.