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

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:

  1. First, determine the revenue ($).
    • The revenue ($) is given as: 400.
  2. Next, determine the cost of goods sold ($).
    • The cost of goods sold ($) is provided as: 300.
  3. 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 = ?