Yusuf Bayrak
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    Gross Profit Margin Calculator

    Gross profit margin shows what share of your revenue is left after the cost of goods sold (COGS). Enter total revenue and COGS to see the result as both a percentage and an absolute amount.

    //Calculator
    // Gross Profit Margin
    0.00%
    Gross Profit Margin = ((Revenue − COGS) / Revenue) × 100
    // Gross Profit
    $0.00

    // Reference: e-commerce typically 20-50%, services 40-60%, SaaS 70-90%. Orientation only, not a fixed target.

    //Guide

    How is gross profit margin calculated?

    The formula is simple: Gross Profit Margin = ((Revenue − COGS) / Revenue) × 100. COGS covers the direct costs of producing or sourcing what you sell — raw materials, production labour, supplier invoices, and shipping or packaging directly attributable to the product. Operating costs such as marketing, rent and management salaries are excluded; those belong in net profit margin.

    Gross margin is the most direct read on your pricing power and sourcing efficiency. When it falls, either your selling price is under pressure or unit costs are rising. Track margin per product or category to separate the two — a blended figure hides the mix of profitable and unprofitable SKUs.

    Industry reference ranges

    There is no universal target; it varies with the business model. As rough guidance: e-commerce and retail typically land in the 20-50% band, services and agencies around 40-60%, and SaaS or digital products in the 70-90% range. Treat these as orientation rather than hard claims — your own period-over-period trend is a more meaningful benchmark than any industry average.

    //Frequently Asked Questions

    What is gross profit margin?

    Gross profit margin is the share of revenue left after subtracting the cost of goods sold: ((Revenue − COGS) / Revenue) × 100. It measures the underlying profitability of your product or service, independent of operating expenses.

    What is a good gross profit margin?

    It depends on the model. Rough ranges: e-commerce 20-50%, services 40-60%, SaaS 70-90%. Rather than chasing a fixed threshold, watch your own trend — a declining margin signals price pressure or rising unit costs.

    What is included in COGS?

    Direct costs of making a product sellable: raw materials, production labour, supplier and contract-manufacturing invoices, plus product-attributable shipping, packaging and payment fees. Rent, marketing budget, management salaries and taxes are not part of COGS.

    What is the difference between gross and net profit margin?

    Gross margin subtracts only COGS and measures product-level profitability. Net margin subtracts every cost — operating expenses, marketing, interest and tax — showing the true profitability of the business. Read them together using the Net Profit Margin Calculator.

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    Source: Investopedia — Gross Profit Margin