# Gross Profit Margin Calculator

Written by:
PK

Below is a gross margin calculator to compute a company's gross margin using its revenue and gross profit. Enter a company's top line revenues and cost of goods sold (COGS, to compute gross profit) to compute its gross margin

## Gross Margin Calculator

Table of Contents

## What is the Gross Profit Margin?

Gross profit margin or gross margin is the percentage left for a company to use after the expenses it needs to collect revenue. Gross profit is the total top-line sales of a company minus its cost of goods sold (COGS), or the costs to get that revenue.

Gross profit is computed before any operating expenses – sales, marketing, general and administrative, research and development, and any capital expenditures. Having a higher gross margin gives a company more room to build a solid business... although all sorts of high-quality businesses are build on top of lower and higher gross margins. Pure software companies, famously, have very high gross profit margins – generally only needing to scale compute power and similar charges to generate more revenue.

### Gross Profit Margin Formula

The formula for gross profit margin is:

Gross\ Profit\ Margin=\frac{revenue-COGS}{revenue}

Where:

• COGS: Cost of Goods Sold, abbreviated COGS, from the income statement
• Revenue: The company's top line sales

### Margin Calculators

Now that you've tried the gross profit margin calculator, try some of the other margin calculators:

### PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and lives in New Hampshire with his wife, kids, and dog.

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