Enter the revenue ($) and the cost of goods sold ($) into the Gross Margin Calculator. The calculator will evaluate and display the Gross Margin.

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## Gross Margin Formula

The following formula is used to calculate the Gross Margin.

GM = (R - C) / R

- Where GM is the Gross Margin
- R is the revenue ($)
- C is the cost of goods sold ($)

To calculate the gross margin, divide profit by the revenue.

## How to Calculate Gross Margin?

The following example problems outline how to calculate Gross Margin.

Example Problem #1:

- First, determine the revenue ($).
- The revenue ($) is given as: 400.

- Next, determine the cost of goods sold ($).
- The cost of goods sold ($) is provided as: 300.

- Finally, calculate the Gross Margin using the equation above:

GM = (R – C) / R

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

GM = (400 – 300) / 400 = .25

Example Problem #2:** **

For this problem, the variables required are provided below:

revenue ($) = 500

cost of goods sold ($) = 100

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

GM = (R – C) / R** = ?**