Gross Margin Calculator

Gross margin is the percentage of revenue that remains after subtracting the cost of goods sold (COGS). It measures how efficiently a business produces and sells its products or services. The formula is: (Revenue - COGS) / Revenue x 100.

Gross margin expresses profit as a percentage of revenue (selling price), while markup expresses profit as a percentage of cost. For example, if you buy for R100 and sell for R150, the margin is 33.3% but the markup is 50%.

A "good" gross margin depends on your industry. Retail businesses typically achieve 25-35%, manufacturing 30-45%, services 50-70%, construction 15-25%, and technology companies 60-80%. Compare your margin to industry benchmarks to gauge performance.

You can improve gross margin by increasing prices, negotiating lower costs with suppliers, improving production efficiency, reducing waste, or shifting your product mix toward higher-margin items.

COGS includes all direct costs of producing goods or delivering services: raw materials, direct labour, manufacturing supplies, and freight-in. It does not include indirect costs like rent, utilities, or marketing expenses -- those are operating expenses.