Gross Margin by Product
Compare product gross profit, margin percentages, and revenue weighted margin from selling price, unit cost of goods sold, and units sold.
Enter prices and costs in USD, using the same accounting period for every row. Unit cost follows your accounting method. Amounts are not converted.
Earlier editorial review
- Reviewed
- 2026-09-22
- Methodology
- 1.1
Sources
How the Gross Margin Calculator Works
For each product, gross profit per unit is selling price minus unit cost of goods sold. Gross margin percentage divides that amount by selling price. Total gross profit also depends on units sold, so a product with a smaller margin per unit may contribute more gross profit when its volume is higher.
Enter one selling price, one unit cost of goods sold, and a whole number of units sold for the period. Use the same currency and accounting period for every product. Unit cost is the cost amount you assign to each unit under your accounting method. It can include allocated production costs, so it is not necessarily only a variable cost.
The results rank products by gross margin percentage and by total gross profit. They also show total revenue, total cost of goods sold, and blended gross margin. Blended margin is total gross profit divided by total revenue, not an average of product percentages.
The concentration result selects the ceiling of 20 percent of all product rows, with at least one row, after ranking them by gross profit. It divides those selected rows’ positive gross profit by positive gross profit across all rows. Loss making rows are excluded from that share calculation. This describes the entered mix and is not an optimal product mix rule.
Step by step
- Enter each product’s selling price, unit cost of goods sold, and units sold for one period.
- Compare the two rankings, total gross profit, and revenue weighted blended margin.
- Read concentration as the share of positive gross profit from the selected top rows.
Worked Example
Product A sells for 50 per unit, has unit cost of 30, and sells 10 units. Product B sells for 20, has unit cost of 15, and sells 20 units. The two products generate revenue of 500 and 400, cost of goods sold of 300 and 300, and gross profit of 200 and 100.
Together, revenue is 900 and gross profit is 300, so blended gross margin is 33.3333 percent. A has 40 percent gross margin and B has 25 percent. Their shares of positive gross profit are 66.6667 percent and 33.3333 percent. With two rows, the selected top 20 percent is one row, so concentration is 66.6667 percent.
When to Use This Calculator
Use the comparison when you want to see how product price, assigned unit cost, and sales volume relate to gross profit in one period. The separate percentage and total profit rankings show why a high margin per unit does not always mean the largest gross profit contribution.
Review the blended margin after changing a price, cost assumption, or quantity. The result describes only the product rows and amounts entered. To assess business profitability, include operating expenses and other income statement items in a separate analysis.
Common Mistakes
Do not average product margin percentages to get the overall margin. Divide total gross profit by total revenue instead. Also distinguish margin from markup: gross margin uses selling price as the denominator, while markup uses cost.
Check that every row uses the same period and currency. Use a selling price that reflects the sales being measured, and assign unit cost consistently. This calculator does not separately subtract fixed operating expenses, returns, discounts, or unsold inventory.
Gross Margin Formulas
For each product:
Gross profit per unit = Selling price − Unit cost of goods sold
Gross margin % = Gross profit per unit ÷ Selling price × 100
Revenue = Selling price × Units sold
Gross profit = Gross profit per unit × Units sold
Totals:
Total gross profit = Sum of product gross profit
Blended gross margin % = Total gross profit ÷ Total revenue × 100
Positive gross profit share:
Product share % = max(product gross profit, 0) ÷ Sum of positive product gross profit × 100
Concentration:
Rank all product rows by gross profit, highest first
Selected row count = ceiling(20% × all row count), minimum 1
Concentration % = Positive gross profit in selected rows ÷ Positive gross profit in all rows × 100
A zero selling price has no defined gross margin percentage. When there is no positive gross profit, product shares and concentration are unavailable. The total gross profit can still be negative because loss making rows remain in the blended result.
Assumptions and Limitations
The calculation uses one selling price, one assigned unit cost, and one whole unit quantity per product for the entered period. Gross profit is not contribution margin, operating income, or net income. Results do not separately account for discounts, returns, waste, unsold inventory, operating expenses, taxes, or changes in currency. Use the same currency and period in every row. Product cost classification depends on your accounting method.
Key Terms
- Gross profit per unit
- Selling price per unit minus unit cost of goods sold. It is an amount of money before operating expenses.
- Gross margin percentage
- Gross profit per unit divided by selling price per unit. A zero selling price gives no defined percentage.
- Blended gross margin
- Total gross profit divided by total revenue across the entered products. It is weighted by revenue, not an average of row percentages.
Compare Related Questions
Gross margin describes revenue after cost of goods sold. A break even analysis asks how sales and contribution margin cover fixed costs, so it uses a different cost concept. Keep the distinction in mind when moving from product gross profit to a break even estimate.
If you need to examine fixed costs and target sales, use a break even calculator. For several products, a multi product break even tool can model a sales mix using contribution margin assumptions. This calculator alone does not determine a break even point.
FAQ
Is gross margin the same as contribution margin?
No. Gross profit is revenue minus cost of goods sold as assigned in your accounts. Contribution margin usually subtracts variable costs from revenue. The two amounts can differ when cost of goods sold includes allocated fixed production costs or when variable costs sit outside cost of goods sold.
How is blended gross margin calculated?
The calculator divides gross profit across all entered products by their combined revenue, then multiplies by 100. This weights each product by revenue. It does not average the individual margin percentages.
What does the concentration percentage mean?
It is the share of positive gross profit attributed to the highest gross profit rows selected by count. The selection is the ceiling of 20 percent of all rows, with at least one row. Products with losses remain in the ranking but do not add to the positive gross profit denominator.
Why can a product have a high margin percentage but rank lower by gross profit?
The percentage measures gross profit per unit relative to price. The gross profit ranking also accounts for units sold. A product with a smaller per unit margin can rank higher if its sales volume is greater.
What should I enter as unit cost of goods sold?
Enter the unit cost amount used in your accounting method for the period. Cost of goods sold may include direct costs and allocated production costs. The calculation does not decide which costs belong in that amount, so apply one consistent accounting definition across products.
Related Tools
Use the Break Even Calculator to study sales needed to cover fixed costs. The Multi Product Breakeven Calculator examines a product mix for a break even target. The CVP Target Profit Calculator explores price and volume assumptions for a profit target.