Business
Calculator for gross margin
Calculate gross profit, gross margin and the cost-of-goods ratio.
Add to workspaceYour numbers
Result dey update as you type; no Calculate button dey. All calculation dey run inside your browser.
Gross margin
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How the result break down
| Amount |
|---|
Gross profit na revenue minus cost of goods sold only — operating expenses no dey deducted here.
Quick look at the result
The two bars together na all the revenue. If the gross-profit bar longer, the margin higher.
Margin for different revenue levels
| Revenue | Gross margin |
|---|
Cost of goods sold remain as you enter am above. Na only revenue dey change for the rows.
Formula
Gross profit = revenue − cost of goods sold. Gross margin = gross profit ÷ revenue × 100%. COGS ratio = cost of goods sold ÷ revenue × 100%. Na revenue we dey divide by for both ratios.
Example wey show the calculation
Revenue na $100,000, cost of goods sold na $60,000: gross profit = $100,000 − $60,000 = $40,000, gross margin = $40,000 ÷ $100,000 × 100% = 40.00%, and COGS ratio = 60.00%.
Where e fit work and limits
Gross profit exclude operating expenses such as payroll, rent, marketing, interest, and tax. Healthy gross margin still fit accompany operating loss once those costs counted — use profit calculator for fuller picture.
Questions wey people dey ask often
How this gross margin calculator dey work?
Gross profit = revenue − cost of goods sold; gross margin = gross profit ÷ revenue × 100%. E dey measure wetin remain after direct cost of wetin you sell.
How this one differ from net margin?
Net margin dey deduct everything, including operating expenses, interest, and tax. Gross margin stop at cost of goods sold, so e higher and no talk anything about overhead.
Gross margin fit be negative?
Yes, if cost of goods sold pass revenue. Each sale dey lose money before you even count operating costs. You need check price or where you dey buy from; cutting unrelated costs no go fix that loss.
Wetin we suppose count as cost of goods wey we sell?
Na direct cost to produce or buy wetin you sell: materials, direct labour and wholesale purchase cost. Rent and marketing na operating expenses, no be COGS.
Why margin dey change when na only revenue change?
Na because COGS remain fixed for the scenario table. For real business, COGS usually dey rise as volume rise. So read that table as wetin fit happen under those assumptions, no be forecast.
Higher gross margin always mean better result?
Usually, but no be at any cost. If you raise prices to increase margin, sales fit drop enough to reduce all the gross profit. Read margin percentage and total profit together.
Other tools wey relate to dis
- Calculator for profit — margin after you remove all costs
- Calculator for break-even point — volume wey go cover fixed costs
- Calculator for discount — how discounts dey reduce margin
Results na estimates; dem no replace advice from qualified professional.