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 ($)
- C is the cost of goods sold ($)
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 = ?
