Gross margin is the difference between the revenue received for a product and the cost of the goods sold (COGS). An example of this is a Baker who sells cakes that cost him $2 to make for a sale price of $6. In this case, the gross margin that he achieves on his product is the revenue he receives ($6) minus the cost of the goods ($2) which gives him a gross margin of $4. His gross margin percentage is 66.67% which is two-thirds of the sale price as profit, one third as cost. To use the calculator below simply replace the revenue and cost of goods sold figures with your own numbers, and then press calculate to receive the profit margin percentage.
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