How To Calculate Gross Margin

Last Updated on August 16, 2023 by Jake Sheridan

In this tutorial, you will learn how to calculate gross margin in Google Sheets.

How To Calculate Gross Margin in Google Sheets

Your company’s gross margin is an important financial metric that businesses use to measure the profitability of their operations. It is calculated by dividing the gross profit by the total revenue. This will give you a percentage value, which indicates the percentage of each sale that is considered to be profit.

For example, if a company has a total revenue of $2500 and a gross profit of $1500, then the gross margin is 1500 / 2500 = 0.6, or 60%. This indicates that 60% of each sale is considered to be profit.

It is important to note that the gross margin does not take into account any other costs or expenses. If you would like a more accurate picture of profitability, consider net margin, which deducts all costs and expenses from the gross revenue.

In this guide, we will show you how to calculate gross margin in a Google Sheets spreadsheet.

How To Find the Gross Margin in Google Sheets

Here’s how to find the gross margin of your business in Google Sheets.

Step 1

First, we’ll need to determine the total revenue earned in a given time frame. The total revenue of a company refers to the total income brought in by a company’s operations.

In this example, our business earned a total revenue of $150,000 for the entire year of 2022.

Step 2

Next, we’ll need to find the gross profit of our business. We can find gross profit by deducting the cost of goods sold (COGS) from the total revenue. COGS typically refers to all expenses that are directly tied to the production of the products being sold by the business.

Step 3

We can find the gross profit margin by dividing the gross profit by the total revenue.

Step 4

The gross margin is represented as a percentage of the total revenue. We can click on the Format as percentage shortcut in the toolbar to convert the decimal value into a percentage.

Summary

This guide should be everything you need to calculate gross margin in Google Sheets.

You may make a copy of this example spreadsheet to test it out on your own.