What Is EBITDA?
EBITDA measures operating earnings before interest, tax, depreciation and amortization.
Read guide →What Is Gross Margin?
Gross margin is the percentage of your revenue that remains after you subtract the cost of goods sold (COGS). It tells you how much is left to pay for rent, salaries, marketing, loans and profit.
A healthy gross margin gives you room to cover running costs. If it is too thin, even strong sales can leave you with little profit. Comparing it over time also shows whether your costs or prices are drifting.
Formula
Gross Margin % = (Revenue − COGS) ÷ Revenue × 100
Example
Revenue ₹2,00,000 and COGS ₹1,20,000 leave a gross profit of ₹80,000. Gross margin = 80,000 ÷ 2,00,000 × 100 = 40%.
Try it yourself
Use the free Gross Margin Calculator to work out your own numbers.
Open Gross Margin CalculatorFrequently asked questions
Is gross margin the same as markup?
No. Margin is measured against the selling price, while markup is measured against cost. A 25% markup equals a 20% margin.
What is a good gross margin?
It varies a lot by industry. Compare yourself with similar businesses and with your own past figures rather than one fixed number.
More guides
Revenue vs Profit
Revenue is the money you bring in. Profit is what you keep after costs.
Read guide →Gross Profit vs Net Profit
Gross profit subtracts only direct costs. Net profit subtracts everything.
Read guide →BizCalc provides calculators and educational information for general informational purposes only. Results are estimates and should not be considered financial, tax, accounting or investment advice.