Gross margin calculator
Margin and markup from revenue and cost of goods — they are not the same number.
How it works
Margin % = (revenue − COGS) ÷ revenue · Markup % = (revenue − COGS) ÷ COGS
Margin is the share of the selling price you keep; markup is how much you added to the cost. On 100,000 of revenue at 60,000 of cost, the margin is 40% and the markup is 66.7% — the same trade, two numbers. Quoting one when you mean the other is the most common pricing mistake there is, so both are shown together, always.
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Frequently asked questions
- What is the difference between margin and markup?
- Margin divides the profit by the selling price; markup divides it by the cost. Markup is always the larger number. A 50% margin is a 100% markup.
- What goes into cost of goods sold?
- The direct cost of what you sold — materials, the labour that made it, inbound freight. Rent, salaries and marketing are operating expenses and belong further down the income statement.
- What is a healthy gross margin?
- It is industry-bound and comparisons across sectors are meaningless. Grocery retail lives in single digits; software often exceeds 80%. Compare yourself to your own trend and to your direct competitors.