About gross margin calculator
Gross margin shows how much of each rupee of sales is left after the direct costs of making or delivering the product.
Formula
Gross margin % = (revenue − COGS) ÷ revenue × 100. Revenue of ₹10 lakh and COGS of ₹6.5 lakh gives a 35% margin.
What counts as COGS
Materials, direct labour and delivery costs directly tied to the product. Rent and marketing are normally not part of it.
A worked example
A business with revenue of ₹25 lakh and cost of goods sold of ₹16 lakh has a gross profit of ₹9 lakh and a gross margin of 36 percent. If COGS rises to ₹17 lakh without a price change, the margin falls to 32 percent.
Why it matters
Gross margin shows how much is left to pay for rent, salaries and marketing. A thin margin leaves little room for mistakes.
