Profitability guide
How to use the gross margin calculator
Worked example
Gross margin: calculation example
$100,000 net revenue less $42,000 cost of goods sold gives $58,000 gross profit. Gross margin is 58%; markup on cost is about 138.1%.
Compare like periods and consistent cost classifications. Moving labor or fulfillment costs between accounts can change the margin without changing the business.
Common question
Understand the result
What is the difference between margin and markup?
Margin divides gross profit by net revenue. Markup divides gross profit by cost. A 50% markup on a $100 cost produces a $150 price and a 33.3% margin.