Compute gross profit and gross margin percent from sales and cost of goods.
Overview
Gross margin isolates product profitability before rent, payroll, and ads. It shows whether the core offer works at the unit level.
Enter revenue and COGS to get gross profit dollars and gross margin percent.
Category managers use gross margin to decide which SKUs keep shelf space or production slots.
Steps
Net sales for the period.
Direct product or service costs.
Review gross profit and margin percent.
Repeat per product group.
Check results against category goals.
Math
grossMargin% = (revenue − cogs) / revenue × 100
Gross profit is revenue minus COGS; divide by revenue for the percentage.
Worked cases
GP $48,000 → 40%
40% gross margin.
GP $30,000 → 25%
25% gross margin.
GP $30,000 → 60%
60% gross margin.
Why use this
Questions