Gross Profit Margin Calculator: Measure Your Business Profitability Instantly
Use the calculator to input sales revenue and cost of goods sold; it instantly returns your gross profit margin so you know what share of every sales dollar becomes profit. Across U-S industries, the average gross margin is about 36 % (CSI Market, 2023).
Gross Profit Margin Calculator
Gross Profit Margin:
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How to use the tool
Enter Sales Revenue. Example 1: $200,000. Example 2: $85,000.
Enter Cost of Goods Sold (COGS). Example 1: $120,000. Example 2: $40,000.
Press “Calculate.” The margin appears instantly as a percentage.
Interpret the result. Compare it with your industry average to judge pricing and efficiency.
Formula standardised in IFRS 15 §C5 (IFRS Foundation, 2021).
FAQ
What is gross profit margin?
Gross profit margin shows the percentage of sales left after paying direct product costs (Investopedia, 2022).
Why does margin matter?
Higher margins give you more cash for marketing, R&D and debt service, improving resilience during downturns (Harvard Business Review, 2020).
What counts as COGS for a service firm?
Include billable labour and materials tied directly to each project, not overhead (IRS Publication 535, 2023).
How often should I check it?
Monthly reviews let you catch cost spikes before they erode annual profits (SBA Management Guide, 2023).
Is 0 % margin ever acceptable?
Start-ups sometimes run near break-even to gain market share, but only with clear funding runway (CB Insights Report, 2022).
How can I improve a low margin?
Raise prices, cut waste, renegotiate supplier contracts and focus on high-margin products (PwC Operational Survey, 2021).
Can margin exceed 100 %?
No; revenue always caps the numerator, so the ratio tops out at 100 % (IFRS 15 Illustrative Example 18).
What’s an expert tip?
“Track margin by product line to spot silent profit drains early” (KPMG Cost Benchmarking, 2022).
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