Gross Profit Margin Calculator
Revenue minus cost of goods, as a percentage.
Gross profit margin
60.0%
$30.00 on $50.00
Everything else — advertising, overheads, your own wages — has to come out of this figure.
How the Gross Profit Margin Calculator works
Gross margin is the share of revenue left after the direct cost of the goods you sold, before any overhead. It is the first number that tells you whether a product can work at all: everything else — advertising, rent, salaries, your own wages — has to come out of it.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How do you calculate gross profit margin?
(Revenue − cost of goods sold) ÷ revenue × 100. On a £50 sale with £20 of goods, gross profit is £30 and gross margin is 60%. Note the denominator is revenue, not cost — dividing by cost gives markup instead, which is a much larger number.
What is a good gross margin?
It varies enormously by model. Retail and general ecommerce often run 30-50%. Handmade and private label can reach 60-70%. Dropshipping frequently sits at 15-25%, which is why it needs volume. Software approaches 80-90%. Compare against your own sector, not a universal figure.
What counts as cost of goods sold?
Only costs that scale directly with each unit: materials, manufacturing, inbound freight, packaging, and the per-unit fulfilment cost. Marketing, software subscriptions, rent and salaries are operating expenses and belong below the gross margin line.
Why is my gross margin healthy but my business unprofitable?
Because gross margin ignores everything except cost of goods. A 60% gross margin means nothing if advertising consumes 40% of revenue and overheads take the other 25%. Net margin is the number that answers whether the business works.