About this calculator
Enter your revenue and cost of goods sold for a month or a year. The calculator gives gross profit and gross margin, which you can track over time or compare with similar businesses.
How to use it
- Enter revenue for the period.
- Enter cost of goods sold for the same period.
- Read gross profit and gross margin.
The formula
Gross margin = (revenue − cost of goods sold) ÷ revenue × 100
- revenue
- net sales for the period
- cost of goods sold
- the direct cost of the goods or services sold
Worked example
Revenue ₹5,00,000, cost of goods ₹3,20,000
- Gross profit = 5,00,000 − 3,20,000 = ₹1,80,000.
- Gross margin = 1,80,000 ÷ 5,00,000 × 100 = 36%.
What the result means
Gross profit has to pay for rent, salaries, marketing and other overheads before any net profit is left. A falling gross margin is an early warning that costs are rising faster than prices.
Assumptions
- Revenue and costs are for the same period.
Limitations
- Overheads, interest and tax are not included; this is not net profit.
Frequently asked questions
What is the difference between gross and net margin?
Gross margin subtracts only direct costs. Net margin subtracts all costs, including overheads, interest and tax.
What counts as cost of goods sold?
Purchase cost or materials, freight to bring goods in, and labour directly used to make them.
Should revenue include GST?
No. Use sales without GST, since GST collected is paid to the government.
Last reviewed on 1 October 2026. Found a mistake? Tell us.