Gross Margin Calculator

Gross margin in retail

Gross margin tells you what share of revenue survives once you take out the cost of goods sold (COGS): gross margin = (revenue − COGS) / revenue · 100%. Example: a store pulling in R$ 100,000 of monthly revenue against R$ 60,000 of COGS lands at a gross margin of 40%. That R$ 40,000 is what's left to cover operating expenses, pay taxes and, hopefully, leave some net profit. Benchmarks swing a lot by sector. Fashion retail runs on 50–60%, electronics on 15–25%, supermarkets on 20–25%, and SaaS on 70–90%. It's the first line of the P&L statement, and it drives most product-level calls about which SKUs to keep, push or drop.

Applications and context

It shows up in P&L analysis, sector benchmarking, product-mix decisions and the evaluation of supplier negotiations, and it feeds break-even and pricing models. When gross margin slides over time, the cause is usually cost inflation, price competition, or a drift toward lower-margin SKUs, and any of those should put management on alert.

FAQ

Is gross margin the same as profit? Not quite. Gross margin only takes out COGS. Operating expenses, taxes and financial costs come off later, and what remains is the net margin.

How does gross margin compare to markup? Markup is figured over cost, while gross margin is figured over revenue. A 100% markup works out to a 50% gross margin.

Should freight and packaging count as COGS? Variable costs that ride directly on the sale, like inbound freight, packaging and payment fees, usually go in. Fixed overhead stays out.