Gross margin calculator
How much of the entered revenue remains after the cost of goods or services sold?
A teaching example in the units shown below.
These authored example inputs illustrate the calculation. Replace them with your own documented amounts, periods and rates; they are not measured industry averages or available offers.
Use one consistent period. Exclude pass-through sales tax and subtract returns and allowances.
Enter the complete cost of delivering those sales. Classify costs consistently with the operating-expense input.
Your entered scenario
Starting exampleCalculation updated using the entered assumptions.
Formula and interpretation
Gross profit = revenue − cost of sales
Gross margin = gross profit ÷ revenue
Markup = gross profit ÷ cost of sales
To reproduce the worked example, choose Hypothetical arithmetic example under Starting example. Business presets have their own inputs; compare the selected values before applying the result.
Margin uses selling revenue as its denominator; markup uses cost. Losses remain negative.
Use one consistent period or sold unit and a documented cost-of-sales boundary.
Worked example: $10,000 revenue less $6,000 cost of sales leaves $4,000 gross profit. Gross margin is 40% of revenue; markup is about 66.7% of cost. With the same revenue and $7,000 cost, gross margin falls to 30%.
For the Pharmacy case, compare earned medicine and front-shop sales with the corresponding sold-goods cost before interpreting turnover. Keep payroll and overhead separate when they fall outside that cost-of-sales boundary.
Definitions and sources
These references support definitions and calculation boundaries, not the selected amounts. Worked examples below use the hypothetical arithmetic inputs. A selected business preset has its own roster, cost allocation and evidence; its results can differ without a formula error.
- Financial-statement definitions — U.S. Securities and Exchange Commission. Supports the income-statement sequence and the distinction between earnings and cash flows. Accessed October 4, 2026.
Continue with a related calculation
Connect the calculation to a complete operating plan
Review startup uses, staffing, annual results and input evidence alongside the relevant worksheets. A single calculation does not replace local quotes or a dated cash schedule.
Read the Pharmacy operating case →Check the input evidence and limits →
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