Cernarus

Gross Margin Calculator

This Gross Margin Calculator computes gross profit and gross margin using standard accounting definitions. Enter total revenue (sales) and cost of goods sold (COGS); provide units sold to compute per-unit profit.

Gross profit is revenue minus COGS. Gross margin measures gross profit as a share of revenue and is commonly expressed as a percentage to compare product lines, time periods, or competitors while controlling for scale.

Updated Nov 20, 2025

Inputs

Results

Updates as you type

Gross Profit

$400.00

Gross Margin (%)

4000.00%

Gross Margin (decimal)

0.4

Gross Profit per Unit

—

OutputValueUnit
Gross Profit$400.00currency
Gross Margin (%)4000.00%—
Gross Margin (decimal)0.4—
Gross Profit per Unit—currency
Primary result$400.00

Visualization

Methodology

Formulas used: Gross Profit = Revenue − COGS; Gross Margin (%) = (Gross Profit / Revenue) × 100; Gross Margin (decimal) = Gross Profit / Revenue; Gross Profit per Unit = Gross Profit / Units Sold.

These calculations follow standard financial-statement conventions used in explanatory guidance from regulators and accounting boards. Inventory valuation and cost recognition (FIFO, LIFO, average cost) will alter reported COGS and therefore margins; consult accounting guidance if you need GAAP/IFRS-level reconciliation.

This tool assumes consistent currency and period for revenue and COGS. Do not mix periods (e.g., monthly revenue with annual COGS) or combine accrual and cash basis figures without adjustment. For small-volume or zero-revenue cases, interpret percentage outputs carefully—division by zero is possible when revenue or units sold equals zero.

Expert Q&A

What should I enter for Revenue and COGS?

Enter totals for the same reporting period and in the same currency. Revenue is the total sales amount; COGS includes direct production costs such as materials and direct labor. Exclude operating expenses like marketing and rent from COGS.

Why does the calculator show an error or 'Infinity' for per-unit profit?

Per-unit profit divides gross profit by units sold. If 'Units Sold' is zero, the calculation is undefined. Enter a positive units-sold value or leave units blank if you do not require per-unit metrics.

Why might gross margin differ from my accounting system?

Differences commonly arise from inventory accounting methods (FIFO, LIFO, weighted-average), timing differences, intercompany eliminations, or whether returns and allowances were deducted from revenue. For officially audited figures, reconcile with your ledger and accounting policies.

Is there an industry benchmark for a 'good' gross margin?

Benchmarks vary heavily by industry. High-volume commodity businesses typically have lower margins than software or branded consumer-goods companies. Use sector-specific reports or government statistics for benchmarking and compare like-for-like (product mix, geography, and accounting basis).

Can I use this for forecasting?

Yes. Use projected revenue and projected COGS (based on expected input costs, yields, or vendor pricing) to estimate future gross margins. Document assumptions and stress-test scenarios for key inputs such as material cost increases or volume changes.

How precise are results and how should I round?

Results are calculated from the raw inputs. For reporting, round currency to two decimal places and percentages to one or two decimal places depending on materiality. For regulatory or audited reports, follow your accounting policies and rounding rules.

Sources & citations