Gross Profit Margin Calculator
Enter cost and selling price to get gross profit, margin % and markup % instantly
How to Calculate Gross Profit Margin
Gross profit margin tells you what percentage of every sale you keep after covering the direct cost of the product.
The gross profit margin calculator uses the standard accounting formula. First find gross profit, then express it as a percentage of revenue (selling price):
Gross Profit Margin (%) = (Gross Profit ÷ Selling Price) × 100
Worked Example
A product costs $60 and sells for $100. Gross profit is $40. Gross profit margin is ($40 ÷ $100) × 100 = 40%. That means 40 cents of every dollar of revenue is gross profit, before operating expenses and tax.
| Cost | Selling Price | Gross Profit | Margin % |
|---|---|---|---|
| $60 | $100 | $40 | 40.00% |
| $70 | $100 | $30 | 30.00% |
| $50 | $120 | $70 | 58.33% |
Margin is always calculated on the selling price, never the cost. Calculating profit on cost gives you markup, which is a different (and larger) number — see our margin vs markup guide.
What Is a Good Gross Profit Margin?
It varies by industry: software and consulting often exceed 70%, retail averages 20–40%, manufacturing 15–35%, and grocery as low as 10–15%. Read the full breakdown in what is a good gross profit margin.
When to Use This Calculator
Use the gross profit margin calculator whenever you need to price a product, evaluate a supplier quote, compare product lines, or check whether a sale still leaves enough margin after a discount. For reverse calculations (you know the margin you want and need the price), use the advanced GP calculator, and to calculate from cost upward use the markup calculator.
Frequently Asked Questions
What is gross profit margin?
+Gross profit margin is gross profit expressed as a percentage of revenue. It shows what share of each sale you keep after the direct cost of goods, before operating expenses, interest and tax.
How do you calculate gross profit margin?
+Subtract cost from selling price to get gross profit, divide by selling price, then multiply by 100. For example, ($100 − $60) ÷ $100 × 100 = 40%.
Is margin calculated on cost or selling price?
+Always on the selling price. Profit calculated as a percentage of cost is called markup, which is a different and larger figure.
What is a good gross profit margin?
+It depends on the industry. Software and services often exceed 60–80%, retail is typically 20–40%, manufacturing 15–35%, and grocery 10–15%.
Does this calculator include tax?
+Yes, optionally. Add a tax rate and the calculator also shows tax amount and net profit after tax. Leave it blank for a pure gross profit calculation.