Gross Margin (GM)
Revenue minus cost of goods sold, expressed as a percentage of revenue
FORMULA
Gross Margin % = ((Revenue - Cost of Goods Sold) / Revenue) × 100
Alternate Calculations
Gross Profit
Revenue - Cost of Goods SoldAs Ratio
Gross Profit / RevenueWhat is Gross Margin?
Gross Margin measures the percentage of revenue retained after paying for the direct costs of producing goods or services. It reflects how efficiently a company produces its products and is a key indicator of pricing power and production efficiency. Higher gross margins indicate better profitability at the production level and are critical for evaluating unit economics.
Chart
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700,000revenue · JunGross Margin
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Sample Data
| month | revenue | cogs | margin |
|---|---|---|---|
| Jan | 500,000 | 300,000 | 40 |
| Feb | 525,000 | 310,000 | 41 |
| Mar | 575,000 | 330,000 | 43 |
| Apr | 600,000 | 345,000 | 42 |
| May | 650,000 | 368,000 | 43 |
| Jun | 700,000 | 385,000 | 45 |
Required Data Columns
RevenueCost of Goods Sold