Enter the total sales revenue ($) and the total direct costs ($) into the Cost Margin Calculator. The calculator will evaluate and display the Cost Margin. 

Cost Margin Formula

The following formula is used to calculate the Cost Margin. 

CM = (SR – DC) / SR *100

  • Where CM is the Cost Margin (%)
  • SR is the total sales revenue ($) 
  • DC is the total direct costs ($) 

How to Calculate Cost Margin?

The following example problems outline how to calculate Cost Margin.

Example Problem #1:

  1. First, determine the total sales revenue ($). 
    • The total sales revenue ($) is given as: 550.
  2. Next, determine the total direct costs ($). 
    • The total direct costs ($) is provided as: 380.
  3. Finally, calculate the Cost Margin using the equation above: 

CM = (SR – DC) / SR *100

The values given above are inserted into the equation below and the solution is calculated:

CM = (500 – 380) / 380 *100 = 31.578 (%)


Example Problem #2: 

For this problem, the variables required are provided below:

total sales revenue ($) = 640

total direct costs ($) = 134

Test your knowledge using the equation and check your answer with the calculator above.

CM = (SR – DC) / SR *100 = ?