How it works
Gross margin = (revenue − cost of goods sold) ÷ revenue × 100.
A worked example
Revenue of 1,000 and cost of goods sold of 600 gives 400 gross profit and a 40% margin.
What to keep in mind
Use matching periods and a consistent treatment of tax. Gross profit excludes overheads, interest and income taxes. This is not net profit.
A common question
Is margin the same as markup?
No. Margin divides profit by revenue; markup divides profit by cost.
For general information and planning, not personalised financial or tax advice. Verify important decisions with a qualified adviser.