How to Calculate Gross Margin
Gross margin shows what portion of every sales dollar is left after covering the direct cost of producing what you sold — before rent, salaries, marketing, or any other operating expense comes out. Because that direct-cost share varies enormously by business model, comparing two very different companies side by side is the clearest way to see what the number actually measures.
Calculate it
Worked examples
Worked Example 1 — Specialty Coffee Roaster
A coffee roaster brings in $60,000 in monthly revenue, with $21,000 in cost of goods sold (green beans, roasting supplies, packaging, and direct labor). Gross profit = $60,000 − $21,000 = $39,000. Gross margin = ($39,000 ÷ $60,000) × 100 = 65%.
Worked Example 2 — Hardware Manufacturer
A hardware manufacturer reports $2,400,000 in annual revenue against $1,680,000 in cost of goods sold (materials, components, and factory labor). Gross profit = $2,400,000 − $1,680,000 = $720,000. Gross margin = ($720,000 ÷ $2,400,000) × 100 = 30%.
The roaster keeps roughly twice as much of each sales dollar as the manufacturer does — not because one business is run better than the other, but because physical manufacturing carries direct costs that a smaller-batch, service-heavy business doesn’t. Finmap tracks gross margin from your connected accounts by product line or time period, so you can see whether your own margin is holding steady, improving, or slipping before it shows up in your bottom line.
Track this metric automatically
Finmap calculates it from your connected accounts and shows the trend over time — no spreadsheets to rebuild each month.
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