Gross Profit Margin Calculation
GROSS PROFIT MARGIN DEFINITION:
The Gross Profit Margin Calculation shown below will calculate the gross profit margin of any company if you simply enter in the company’s sales and the company’s cost of goods sold (COGS). How do you use gross profit margin to make business decisions? Many business owners will use gross profit margin calculations to help them price their products, track changes over time, and even take a closer look at some of the various cost factors that go into the cost of goods sold number that is input into the calculation to arrive at the gross profit margin calculation. The gross profit margin calculation can be done manually by first taking the total revenue or total sales of the company and then subtracting the cost of goods sold (COGS) to arrive at the gross profit number and then taking that gross profit number and dividing it by the total revenue or total sales number. Of course, our free online gross profit margin calculator does the calculations instantly for you so all you have to do is just enter in the total sales and the COGS below and press the calculate button.
GROSS PROFIT MARGIN FORMULA:
Gross Profit Margin = Sales – Cost of Goods Sold / Sales OR Gross Profit / Total Revenue