Free calculator
Gross margin calculator
Calculate gross profit and gross margin from revenue and cost of goods or services sold.
Reviewed by the Booksmrt bookkeeping teamLast reviewed 2026-07-27
Result
- Gross profit
- $40,000
- Gross margin
- 40.0%
Formula
Gross margin = (revenue - direct cost) / revenue x 100
When to use it
Use it to compare the economics of products, services, channels, or periods with consistent cost classification.
What it does not prove
The result is only comparable when direct costs are classified consistently. It does not include operating expenses or cash timing.
Sources
Keep learning
Gross profitGross profit is revenue minus the direct cost of producing the goods or services sold.Net profitNet profit is the amount remaining after recognized expenses are subtracted from revenue for a period.RevenueRevenue is income earned from a business's ordinary activities before subtracting expenses.
Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.