Gross Margin Calculator
Calculate gross margin percentage and gross profit from revenue and cost of goods sold.
Results are for general guidance only — not professional advice. Learn more.
How to use this tool
Enter your revenue and cost of goods sold to instantly calculate your gross profit, gross margin percentage, and markup percentage. Results update as you type.
- Enter your total Revenue for the period in pounds.
- Enter your Cost of Goods Sold (COGS) — the direct costs to produce or purchase what you sell.
- Read off your Gross Profit, Gross Margin %, and Markup % instantly.
- Use these figures to benchmark against industry averages or set pricing targets.
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Frequently asked questions
What is gross margin?
Gross margin is the percentage of revenue that remains after subtracting the cost of goods sold (COGS). It shows how efficiently a business produces or sources its products relative to its revenue. A higher gross margin means more money is available to cover operating expenses and generate profit.
What is a good gross margin?
A good gross margin varies by industry. Software and SaaS businesses often achieve 70–90%, while retail businesses typically see 20–50%, and manufacturing businesses 25–35%. The key is to benchmark against your specific industry and track improvement over time.
What is the difference between gross margin and gross profit?
Gross profit is an absolute figure in pounds (Revenue minus COGS), while gross margin is gross profit expressed as a percentage of revenue. For example, if revenue is £100,000 and COGS is £60,000, gross profit is £40,000 and gross margin is 40%.
What is the difference between gross margin and markup?
Gross margin is calculated as a percentage of the selling price (revenue), whereas markup is calculated as a percentage of the cost. For the same product, markup will always be a higher percentage than margin. For example, if cost is £60 and price is £100, the margin is 40% but the markup is 66.7%.
How can I improve my gross margin?
You can improve gross margin by increasing your selling prices, reducing the cost of goods sold through better supplier negotiations or bulk purchasing, improving production efficiency, focusing on higher-margin products or services, and reducing waste or shrinkage in your supply chain.