---
title: "Gross Margin Calculator: Gross Profit and Margin %"
canonical: https://luckpanda.app/tools/gross-margin-calculator
language: en
updated: 2026-10-09
content: baseline
---

# Gross margin calculator

**Gross margin calculator: how it works** Gross margin = (revenue − cost of goods sold) ÷ revenue × 100. Revenue of $500,000 with COGS of $320,000 gives $180,000 gross profit and a 36% gross margin.

Free online tool: https://luckpanda.app/tools/gross-margin-calculator (create on screen, no account needed).

## Gross margin, worked through

A shop sells $500,000 of stock in a year. Opening stock was $60,000, it bought $330,000 and closing stock is $70,000, so COGS = $60,000 + $330,000 − $70,000 = $320,000. Gross profit is $180,000 and gross margin is 36%.

| Revenue | COGS | Gross profit | Gross margin |
| --- | --- | --- | --- |
| $100,000 | $70,000 | $30,000 | 30% |
| $500,000 | $320,000 | $180,000 | 36% |
| $1,200,000 | $300,000 | $900,000 | 75% |

## How to use the gross margin calculator

1. Pick the currency.
2. Enter revenue for the period.
3. Enter the cost of goods sold for the same period.
4. Read the gross profit and gross margin.

## Using gross margin

Gross margin tells you how much of each sale is left to pay for overheads and profit. Track it month by month: a falling gross margin usually means rising supplier prices, more discounting, or a shift towards lower-margin products. Compare it with businesses in the same trade, since normal margins vary widely between retail, manufacturing and services.

## Questions people ask

### What is the gross margin formula?

Gross margin = (revenue − cost of goods sold) ÷ revenue × 100. Revenue of $500,000 with COGS of $320,000 gives $180,000 gross profit and a 36% gross margin.

### What goes into cost of goods sold?

The direct costs of what you sold: materials or stock purchased, direct labour, freight in and production overheads. Selling, marketing and office costs are operating expenses, not COGS.

### What is the difference between gross margin and net margin?

Gross margin only subtracts the direct cost of sales. Net margin subtracts everything: operating costs, interest and tax. A business can have a healthy gross margin and still lose money.

### Is gross margin the same as gross profit?

Gross profit is an amount (revenue − COGS). Gross margin is that amount as a percentage of revenue.