Gross Profit Margin Calculator

The gross profit margin calculator shows how much of every sales dollar you keep after the direct cost of making or buying what you sell. You enter your total revenue and your cost of goods sold, often called COGS, and the tool returns your gross profit in dollars and your gross margin as a percentage. Cost of goods sold covers the direct costs tied to your sales, such as materials, stock you buy in for resale, and the labour that goes straight into the product or service. It does not include overheads like rent, marketing, or admin salaries, which belong further down the profit and loss statement. Gross margin is one of the clearest early signals of whether your pricing and production costs are working together. A New Zealand retailer, manufacturer, cafe owner, or tradesperson can use it to check that prices cover direct costs with enough left over to fund the rest of the business. To get a reliable figure, make sure revenue and COGS cover the same period and that COGS captures every direct cost, including freight and packaging. Track the percentage month by month rather than focusing on a single result, because a steady or rising margin usually matters more than one good month. If your margin is slipping, look at supplier pricing, stock wastage, discounting, and whether your selling prices have kept pace with costs. Comparing your gross margin against others in your industry helps you judge whether it is healthy. All figures are in New Zealand dollars and are an estimate to guide decisions, not a substitute for tailored accounting advice from your adviser.

Advertise on this page

Revenue ($)

Cost of goods sold ($)

40.0%

Gross profit margin

Gross profit$200,000

Gross margin = (revenue - COGS) / revenue. Estimate only, not financial or tax advice.

How it works

Gross profit is revenue minus the cost of goods sold. Gross margin is that gross profit divided by revenue, shown as a percentage. The defaults use $500,000 of revenue and $300,000 of COGS.

Worked example

With revenue of $500,000 and COGS of $300,000, gross profit is $200,000. Dividing $200,000 by $500,000 gives 0.40, which is a 40.0 percent gross margin.

Related calculators

Gross Profit Calculator: total gross profit.
Net Profit Margin Calculator: margin after all costs.
Operating Margin Calculator: margin after operating costs.
Profit Margin Calculator: price from cost and margin.
Profit Margin Guide: background on this topic.
Cashflow vs Profit: background on this topic.

Frequently asked questions

What counts as cost of goods sold?

Cost of goods sold is the direct cost of the products or services you sell, such as materials, stock for resale, freight in, and direct labour. It excludes overheads like rent, marketing, and admin wages. Keeping COGS consistent makes your margin comparable over time.

What is a good gross profit margin?

It varies widely by industry. Retail and grocery often run on thin margins while software and many services run much higher. Compare your margin with similar businesses and watch the trend rather than chasing one number.

How is gross margin different from net margin?

Gross margin only deducts direct costs from revenue. Net margin deducts all expenses, including overheads, interest, and tax. Net margin is always the same or lower than gross margin.