Gross Profit Margin Calculator
Gross margin tells you how much you keep from each sale before overhead, salaries, or software costs come out. Enter your revenue and cost of goods sold below.
Two examples
A $97 digital product that costs $12 to deliver per sale has $85 gross profit on that sale - a 88% gross margin.
A service business billing $3,000/mo in revenue with $900/mo in contractor costs has $2,100/mo gross profit - a 70% gross margin. Enter your own numbers above to see your real margin.
Methodology
Gross Margin % = (Revenue - COGS) / Revenue x 100. Gross profit is simply revenue minus COGS.
Data source: none - computed entirely from the numbers you enter. Last reviewed: September 2026.
See our full calculation methodology for the exact formula and every calculator's data sources.
Frequently asked questions
What's the difference between gross profit and gross margin?
Gross profit is a dollar amount - revenue minus COGS. Gross margin is that same figure expressed as a percentage of revenue, which makes it easier to compare across products or months regardless of price.
What counts as COGS - and what doesn't?
COGS is the direct cost of producing or delivering what you sold - materials, a per-unit manufacturing cost, a contractor paid per delivery, or payment processing fees tied to that sale. It doesn't include overhead like rent, salaries, marketing, or software subscriptions - those come out later, after gross profit.
Is gross margin the same as net margin?
No. Gross margin only subtracts COGS from revenue. Net margin subtracts everything else too - overhead, salaries, software, marketing, taxes - so it's always equal to or lower than gross margin, and it's the number that actually reflects what you keep.
What's a healthy gross margin for a digital product vs. a service business?
It varies a lot by business model. A digital product with near-zero delivery cost can run 80-95%+ gross margin, while a service business paying contractors or staff to deliver the work often runs 50-70%. There's no single healthy number - what matters more is whether your margin holds up as you scale.
Does gross margin include software or subscription costs?
No - gross margin only accounts for COGS. If you want to see how your software stack affects your bottom line, try the Profit Margin Calculator.
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