Calculate gross margin free of charge online
Calculate gross margin from sales of goods/services excluding VAT and purchase costs of goods excluding VAT
Enter your sales price excluding VAT
Enter your purchase price
Simple online gross margin calculator. Our goal is to offer the best online calculator with fast, helpful answers.
Try our handy online tool to solve your business formula problems .
What is gross margin? Definition
Gross margin measures the ratio between the purchase price excluding VAT or the cost price excluding VAT and the selling price excluding VAT. Gross margin is an essential measure for businesses, as it shows whether or not the company’s sales are profitable.
A high gross margin means you can spend more in other areas of your business, because sales are profitable. On the contrary, a negative gross margin indicates that your product is not profitable, so you need to stop selling or cut costs. Gross margin can be used to set the product’s selling price.
What is a good gross margin?
Gross margin will vary according to products, inventory levels and overall market health.
Gross margin formulas
You can calculate your gross margin using the sales price excluding VAT and the purchase price excluding VAT.
Gross margin = sales price excl. tax – purchase price excl. tax
Example of gross margin
Let’s say you’re a company that sells computers.
You buy your computers for 1,000 euros plus VAT.
You sell them for 1,200 euros ex VAT.
1200 – 1000 = 200
Your gross margin is 200 euros.