Free Gross Margin Calculator
Your whole business's margin, not one product's: revenue minus cost of goods sold, with gross profit, gross margin %, and - add your operating expenses - the net margin that says whether you actually made money. Free, no sign-up.
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The margin ladder: gross pays the bills, net is what you keep
Think of gross profit as the budget your sales generate for running the business. A trader turning over 4,000,000 with 2,600,000 of COGS has 1,400,000 of gross profit - and every naira of rent, salaries, and marketing comes out of that. If operating expenses are 900,000, the net profit is 500,000: a 35% gross margin becomes a 12.5% net margin.
That ladder is why both numbers matter: gross margin tells you whether the trading itself is sound; net margin tells you whether the business built on top of it is. When gross is healthy and net isn't, the problem is overheads - not pricing.
Gross Margin FAQ
How is gross margin calculated?
Gross margin = (revenue - cost of goods sold) ÷ revenue x 100. Revenue of 4,000,000 with 2,600,000 of COGS leaves 1,400,000 gross profit - a 35% gross margin. Enter your period's numbers above and it's computed live.
What counts as cost of goods sold?
The direct cost of the things you actually sold in the period: what you paid for the products (or materials and production labour), plus costs that scale directly with them like inbound freight and duty. Rent, salaries, marketing, and subscriptions are NOT COGS - they're operating expenses, and mixing them in is the most common way small businesses miscalculate their margin.
What's the difference between gross margin and net margin?
Gross margin is what's left after paying for the goods; net margin is what's left after everything - operating expenses too. A business can have a healthy 35% gross margin and a negative net margin if overheads eat more than the gross profit. Add your operating expenses above to see both.
What is a good gross margin?
It varies enormously by industry: distribution and high-volume retail often run 15-30%, manufacturing 25-40%, services and digital products 50%+. The more useful comparisons are your own trend (is it eroding quarter over quarter?) and whether the gross profit covers your operating expenses with room to spare.
My gross margin is shrinking - what do I check first?
The usual suspects, in order: supplier price increases you haven't passed on, discounting that crept in, a sales mix shifting toward low-margin products, and stale cost prices in your records making old margins look better than they were. Per-product margin data tells you which one it is.
How is this different from a Growpins Ledger account?
This calculator needs you to supply the revenue and COGS totals. A free Growpins Ledger account computes them for you: its Profit & Loss report builds revenue from your invoices and COGS from your product cost prices - gross margin included, per period, no spreadsheet.
Still assembling these totals in a spreadsheet?
A free Growpins Ledger account builds the whole P&L for you - revenue from your invoices, COGS from your product cost prices, expenses by category - with gross and net margin computed per period and downloadable for your accountant. Built by the team behind Growpins, founded by Dokun Bamigboye.
Get your P&L automatically - sign up freePricing a single product instead? Use the Profit Margin Calculator, or browse all free tools.