Gross Margin: $100K Revenue, $40K COGS
With $100,000 in revenue and $40,000 in COGS the gross margin is 60%, typical for software or professional services businesses.
How to use this tool
- Enter your total revenue for the period or product.
- Enter your cost of goods sold (direct costs only).
- Read your gross profit, gross margin percentage, and equivalent markup.
A 60% gross margin is a healthy benchmark for many businesses, though the ideal margin varies significantly by industry — software companies often target 70–80%.
Frequently asked questions
- What is the difference between margin and markup?
- Margin is profit as a share of the selling price; markup is the same profit as a share of cost. Markup is always the larger number — a 40% margin is a 66.67% markup, and a 50% markup is only a 33.3% margin.
- What belongs in COGS?
- Only direct costs of producing or delivering the goods or service: materials, direct labour, and freight for products; hosting, support, and payment fees for software. Overhead, marketing, and R&D are operating expenses, not COGS.
- What is a good gross margin?
- It varies widely by industry. Retail and grocery run thin margins; software often exceeds 70–80%. Compare against peers in your sector and track the trend over time rather than chasing a universal number.