- Gross Margin Calculator
Gross margin calculator
Calculate an item’s growth margin and profit using Canva’s gross margin calculator.
Stay on top of your business’s financial health
Being an entrepreneur means having to be on top of business all the time—including your company’s efficiency level. Knowing your gross margin and how it’s trending lets you know whether you’ve established the right sales and business strategies or if you need to pivot. Use Canva’s gross profit margin calculator and get a clear picture of how your company is doing in an instant.
Track your company’s growth potential
Investors want to pour money into winners. Before you make a pitch for funding, analyze how much it would take to grow your business. With Canva’s gross margin percentage calculator, instantly calculate if your current production and labor costs are just right for you to scale your company—or if they leave too little capital to enable growth.
Know how to fine-tune your pricing strategies
Steep competition may compel you to lower your prices and get a bigger market share. Checking your gross margin—and analyzing how much you make per product after taking production, shipping, and handling costs into account—is the first step in coming up with an optimal pricing strategy.
Learn the story your gross margin figure is telling
After using our GP calculator, uncover patterns and trends with Magic Insights(opens in a new tab or window) (Pro), Canva’s data analytics tool. Make a more in-depth analysis of your company’s finances with the help of Magic Formulas(opens in a new tab or window) (Pro), our AI-powered formula generator. And once you’re ready to present your data, transform your findings into engaging visualizations with Magic Charts(opens in a new tab or window).
How to use the gross margin calculator
Frequently asked questions
Gross margin is calculated by subtracting the COGS from the net sales and dividing the result by the net sales. To get the gross margin percentage, multiply the answer by 100.
Net sales is the revenue or total amount of money that was generated from sales during a specified period. For retailers, this can include discounts and deductions from merchandise returned by buyers. Meanwhile, COGS covers the expenses involved in producing merchandise, from the raw materials to direct labor costs.
Different industries have their respective average gross margin percentages. According to the Business Development Bank of Canada, while a 50% gross profit margin may be healthy for many types of businesses, it is a pretty low figure for financial institutions, legal firms, and other service industry companies. Law firms, banks, and tech businesses in particular report gross profit margins within the 90% range due to their lower production costs in comparison to companies that produce merchandise.
- Gross margin and profit margin, also known as net profit margin, are both used to determine the efficiency of a company’s strategy and management for earning profit. But, whereas gross margin looks into how efficiently a business is producing merchandise, given the expenses involved, profit margin looks into the company’s bottom line: Does an increase in revenue mean increased profitability? To compute the profit margin, operating costs and other expenses like debt and taxes are deducted from the gross profit.
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