Gross Profit Margin Calculator
Gross profit margin = (Revenue - Cost of Goods Sold) / Revenue x 100. On Rs 10 lakh revenue with Rs 6 lakh COGS: gross margin = Rs 4 lakh / Rs 10 lakh = 40%. This 40% must cover salaries, rent, marketing, taxes, and still leave net profit. A 40% gross margin in retail is healthy; in software, you would expect 70-80%.
Profit
₹400
Profit Margin
33.33%
Profit / Selling Price
Markup
50%
Profit / Cost Price
Margin % = (Profit / Selling Price) x 100. Markup % = (Profit / Cost Price) x 100. A 50% markup is only a 33.3% margin.
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Common questions about Gross Profit Margin Calculator
What is a good gross profit margin by industry?
Software/SaaS: 70-85%. Pharmaceuticals: 60-75%. Consumer electronics: 35-45%. Retail (clothing): 45-60%. Retail (grocery): 20-30%. Manufacturing: 25-40%. Restaurants: 60-70% on food alone (but high labor costs reduce net margin to 5-15%). Always compare margin within your specific industry, not across sectors.
What is the difference between gross margin and net margin?
Gross margin: (Revenue - COGS) / Revenue. It excludes operating expenses like salaries, rent, marketing. Net margin: Net profit after all expenses and taxes / Revenue. A business can have 50% gross margin but 5% net margin if operating expenses are high. A startup burning cash might have negative net margin despite healthy gross margin.
How can I improve gross profit margin?
Three levers: (1) Raise prices - 1% price increase on Rs 10 lakh revenue = Rs 10,000 extra gross profit with zero cost increase. (2) Reduce COGS - negotiate better supplier terms, reduce waste, improve production efficiency. (3) Improve product mix - sell more high-margin products and less low-margin SKUs. Pricing lever is often the fastest to implement.