Gross Margin: $50K Revenue, $45K COGS
With $50,000 in revenue and $45,000 in COGS the gross margin is only 10%, leaving very little room for operating expenses.
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 10% gross margin is razor-thin and leaves almost no room for operating expenses, sales costs, or profit — businesses in this situation need to either raise prices or cut COGS urgently.
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.