Introduction
Gross profit margin tells you how much money you keep from each dollar of sales after you pay for the goods you sold. It is one of the most important numbers in business. A high margin means you earn more on every sale. A low margin means most of your revenue goes to costs.
This gross profit margin calculator makes it easy to find your margin in seconds. Enter any two values you know — such as revenue and cost, or cost and markup — and the tool figures out the rest. It shows your gross profit margin percentage, markup percentage, total profit, and a full step-by-step breakdown of the math. You can also pick your currency, set decimal places, and add a tax rate if needed.
Whether you run a small shop or manage a large company, knowing your gross profit margin helps you set better prices, control costs, and grow your business. Use the calculator below to get started.
How to Use Our Gross Profit Margin Calculator
Enter any two values you know — such as revenue and cost — and this calculator will find your gross profit margin, markup, profit, and more in seconds.
Pick your first known value. Use the "I know my…" dropdown to choose the first piece of data you have. This can be revenue, cost, profit, gross profit margin %, or markup %.
Pick your second known value. Use the "…and my…" dropdown to choose a different second value. You must pick two different items for the math to work.
Choose your currency. Select USD, GBP, EUR, INR, JPY, CAD, or AUD from the currency dropdown. This sets the correct symbol for all money values.
Set your decimal places. Pick how many decimal places you want in your results, from 0 to 4.
Add tax if needed. Check the "Include Tax / VAT / GST" box if your revenue includes tax. Then type your tax rate as a percent. The calculator will remove the tax before it finds your margin. If you need to calculate tax amounts separately, try our sales tax calculator, VAT calculator, or GST calculator.
Type in your two values. Enter the numbers that match the two variables you picked above. The input labels and symbols update to match your choices.
Click "Calculate." The tool will show your gross profit margin, markup percentage, profit, revenue, cost, a step-by-step solution, and a bar chart that breaks down your revenue. Click "Clear" at any time to reset all fields and start over.
What Is Gross Profit Margin?
Gross profit margin tells you how much money a business keeps from each dollar of sales after paying for the goods it sold. It is shown as a percentage. A higher percentage means the business keeps more money from every sale. For a broader look at how margins work across different contexts, you can also explore our general margin calculator.
How to Calculate Gross Profit Margin
The formula is simple:
Gross Profit Margin = (Revenue − Cost of Goods Sold) ÷ Revenue × 100
Revenue is the total money earned from sales. Cost of goods sold (often called COGS) is what the business paid to make or buy the products it sold. The difference between these two numbers is your gross profit. When you divide that profit by revenue and multiply by 100, you get the gross profit margin percentage.
For example, if a company earns $200 in revenue and spends $120 on costs, the gross profit is $80. The gross profit margin is $80 ÷ $200 × 100 = 40%. This means the company keeps 40 cents from every dollar of sales before paying for things like rent, wages, and taxes.
Gross Profit Margin vs. Markup
People often mix up margin and markup, but they are not the same. Margin is based on the selling price (revenue). Markup is based on the cost. Using the same example above, the markup would be $80 ÷ $120 × 100 = 66.67%. The same dollar amount of profit gives a different percentage depending on which formula you use. If you need to work with markup specifically, our markup calculator can help you convert between cost, selling price, and markup percentage.
What Is a Good Gross Profit Margin?
There is no single "good" number because it depends on the industry. Software companies often have margins above 60%. Grocery stores may have margins below 30%. In general:
- Below 10% is considered low and may signal tight pricing or high costs.
- 10% to 30% is moderate and common in many industries.
- Above 30% is considered healthy and shows strong pricing power.
- Below 0% means the business is selling products for less than they cost to make, which is a loss.
Why Gross Profit Margin Matters
Gross profit margin is one of the most important numbers in business finance. It helps business owners, investors, and managers understand how well a company turns sales into profit at the most basic level. Investors often pair margin analysis with other financial metrics like return on investment (ROI) and break-even analysis to get a complete picture of a company's health. If the margin is shrinking over time, it could mean costs are rising or prices are too low. You can use a percent change calculator to measure how much your margin has shifted from one period to the next. Tracking this number helps businesses make smarter decisions about pricing, suppliers, and which products to sell.