About the Gross Margin Calculator
What is the Gross Margin Calculator?
Gross margin shows how much of revenue remains after paying for the goods or services you sold, before overheads such as rent, salaries and marketing. This gross margin calculator gives the percentage and the gross profit.
It is the first line to watch in any business: if gross margin is too thin, no amount of cost-cutting in overheads will make the business profitable.
How to use the Gross Margin Calculator
- Net Sales Revenue (₹) (sample: 50,00,000)
- Cost of Goods Sold (₹) (sample: 31,00,000)
- Press Calculate Gross Margin (results also refresh as you type). The result card shows the Gross Margin, along with Gross profit, COGS ratio and Markup on COGS.
Formula used
Gross margin = (Net sales − COGS) ÷ Net sales × 100
- Net sales = revenue after returns and discounts, excluding GST
- COGS = cost of goods sold – materials, direct labour and direct production costs
Always use revenue excluding GST; GST collected is not your income.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Net Sales Revenue (₹) | 50,00,000 |
| Cost of Goods Sold (₹) | 31,00,000 |
| Result | Value |
|---|---|
| Gross Margin | 38% |
| Gross profit | ₹19,00,000 |
| COGS ratio | 62% |
| Markup on COGS | 61.29% |
Tips for using the Gross Margin Calculator
- Track gross margin by product; a single low-margin line can drag the whole business down.
- Rising input costs show up first in gross margin – review prices when it slips.