Gross margin calculator
Enter your revenue and your cost of goods sold (COGS) for the same period, for one product or a whole month. You get gross profit and gross margin, the share of each sale left after the goods themselves are paid for.
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Gross margin
60%
- Gross profit
- $28,800.00
How it's calculated
- Gross profit
- = revenue − COGS
- Gross margin
- = gross profit ÷ revenue × 100
Example
A store sold $48,000 last month and the products cost $19,200. Gross profit is $28,800 and gross margin is 28,800 ÷ 48,000 = 60%.
What goes into COGS
Cost of goods sold is what it costs to make or buy what you sold: product cost, inbound freight and packaging, and for dropshipping usually the supplier's shipping too. Ads, apps, staff and payment fees are operating costs, not COGS, so they don't change gross margin.
Gross margin vs net margin
Gross margin shows whether the product itself makes money. Net margin takes everything else off too: ads, payment fees, apps, refunds and salaries. A healthy gross margin is what leaves room for those.
FAQ
What is the gross margin formula?
(Revenue − cost of goods sold) ÷ revenue × 100.
Is gross margin the same as profit margin?
Gross margin only takes off the cost of the goods. “Profit margin” is often used for net margin, which takes off every cost.
Do shipping costs count in COGS?
Shipping you pay to receive stock or to have a supplier ship the order is usually counted in COGS. Free shipping you offer customers is often tracked as a separate selling cost; be consistent month to month.
What's a good gross margin for ecommerce?
It depends on the category and how you get customers. Paid-traffic stores need a gross margin wide enough to pay for ads per order; the break-even ROAS calculator shows that link.
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