Booksmrt

Free calculator

Gross margin calculator

Calculate gross profit and gross margin from revenue and cost of goods or services sold.

Reviewed by the Booksmrt bookkeeping teamLast reviewed 2026-07-27

Result

Gross profit
$40,000
Gross margin
40.0%

Formula

Gross margin = (revenue - direct cost) / revenue x 100

When to use it

Use it to compare the economics of products, services, channels, or periods with consistent cost classification.

What it does not prove

The result is only comparable when direct costs are classified consistently. It does not include operating expenses or cash timing.

Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.