📖 Overview
Use this calculator to measure how much of revenue becomes gross profit after deducting direct costs.
⚙️ How It Works
Gross profit margin measures what portion of revenue remains after covering direct production costs.
The Formula
Gross Margin = [(Revenue − COGS) ÷ Revenue] × 100
| Revenue | Total sales income |
| COGS | Cost of Goods Sold — direct costs to produce what was sold |
| GP | Gross Profit = Revenue − COGS |
💡Gross margin covers only direct costs. Net profit margin also deducts operating expenses, taxes, and interest — it is always lower than gross margin.
Quick Reference
| Industry | Typical Gross Margin |
|---|---|
| Software / SaaS | 70 – 90% |
| Retail (general) | 25 – 45% |
| Restaurant | 60 – 70% |
| Manufacturing | 20 – 35% |
| Grocery / food | 20 – 30% |
Practical Tips
💡 Track gross margin monthly to catch cost increases early.
💡 Compare to industry benchmarks to assess competitiveness.
Frequently Asked Questions
❓ Is gross margin the same as net profit?
No. Gross margin only removes direct costs; net profit removes all costs.
❓ What is a healthy gross margin?
It depends heavily on industry. Software often exceeds 70%; grocery is typically 20-30%.