Gross Margin Calculator
Instantly calculate your gross profit and gross margin percentage. Free, accurate financial tool for small businesses to evaluate pricing and profitability.
Calculate Your Gross Profit Margin
Enter your total revenue and cost of goods sold (COGS) below to instantly see your gross profit, gross margin percentage, and markup.
Margin Calculator
Enter your sales and cost details
Total income from sales
Direct costs to produce goods
Profitability Analysis
Based on your revenue and COGS inputs
Industry Average Gross Margins Reference Chart
Use these benchmarks to see how your business’s gross margin compares to typical UK industry standards. Note that net profit margins will be lower after overheads.
| Industry Sector | Average Gross Margin | Key Cost Drivers |
|---|---|---|
| Software / SaaS | 70% – 85% | Server hosting, development |
| Professional Consulting | 50% – 70% | Contractor fees, software tools |
| Retail (E-commerce & High Street) | 40% – 50% | Inventory, shipping, packaging |
| Manufacturing | 30% – 40% | Raw materials, factory labour |
| Restaurants & Food Service | 30% – 40% | Food ingredients, hourly wages |
Gross Margin FAQ
Everything you need to know about calculating and improving your business’s gross profit margin.
Gross margin is the percentage of total revenue that exceeds the cost of goods sold (COGS). It measures how efficiently a business produces and sells its goods or services before accounting for overheads like rent, salaries, and taxes.
The formula is: ((Revenue – COGS) / Revenue) × 100. For example, if your revenue is £10,000 and your COGS is £6,000, your gross profit is £4,000. Dividing £4,000 by £10,000 gives a gross margin of 40%.
It varies significantly by industry. Retail businesses typically aim for 40-50%, software and SaaS companies often target 70-80%, restaurants might operate on 30-40%, and professional services or consulting can see margins of 50-70%.
Gross margin is your profit expressed as a percentage of revenue (selling price), while markup is your profit expressed as a percentage of cost. For example, a 50% markup on a £100 item makes the selling price £150, but the gross margin is only 33.3% (£50 profit / £150 revenue).