A SaaS company and a construction firm can both report a "healthy" margin and mean two very different numbers, 75% for one, 20% for the other. This calculator gives you the figure that actually travels between industries: gross margin, plus the selling price you'd need to hit a target of your own.
Optional: target margin pricing
Treat this as a pricing worksheet, not tax or accounting advice.
By Jessica MartinezGross Profit = Revenue minus Cost of Goods Sold. Gross Margin % = (Gross Profit / Revenue) x 100. On $100,000 in revenue with $60,000 in COGS, gross profit is $40,000 and gross margin is 40%.
The kind of margin comparisons researchers like NYU's Aswath Damodaran publish sector by sector, condensed to the six industries most calculator visitors ask about:
| Industry | Typical gross margin |
|---|---|
| Software / SaaS | 70 to 85% |
| Retail (general) | 25 to 50% |
| Restaurants | 60 to 70% (food cost only) |
| Manufacturing | 25 to 40% |
| Construction | 15 to 25% |
| Consulting / services | 50 to 70% |
These are reference ranges, not a guarantee your business should land inside them.
Two separate calculations, both using the values already loaded above:
The calculator above runs both at once. The reference table just tells you whether 40% is ordinary or unusual for your industry.
Gross margin only covers COGS. If overhead is eating the rest, the Break-Even Calculator shows how much volume you need before fixed costs stop winning. If your business runs on ad-supported revenue instead of unit sales, the CPM Calculator handles that math instead.
Gross margin is gross profit expressed as a percentage of revenue. Gross Profit = Revenue minus Cost of Goods Sold (COGS). Gross Margin % = (Gross Profit / Revenue) x 100. A 40% gross margin means 40 cents of every dollar in revenue remains after paying the direct cost of producing or sourcing the goods sold.
Gross margin divides profit by the selling price (revenue). Markup divides profit by cost. A product costing $60 that sells for $100 has a 40% gross margin (40/100) but a 66.7% markup (40/60). Margin is always a lower percentage than markup for the same transaction. Using markup to set prices when you need a margin target leads to underpricing every product.
It depends entirely on the industry. Software and SaaS companies often reach 70 to 85% gross margin. Retail averages 25 to 50%. Restaurants run 60 to 70% on food cost but face high labor expenses that compress net margins. Manufacturing typically lands at 25 to 40%. The most useful benchmark is your own gross margin from the same quarter last year, not an industry average from a blog post.
Cost of Goods Sold covers the direct costs tied to producing or purchasing what you sold: raw materials, direct labor, manufacturing overhead, and the purchase price of inventory for resellers. It does not include rent, management salaries, marketing spend, or general overhead. Misclassifying overhead as COGS inflates gross margin; misclassifying COGS as overhead deflates it.
Gross margin only subtracts COGS from revenue. Net margin subtracts every cost including operating expenses, interest, and taxes. A business can have a 60% gross margin and a 5% net margin if overhead is high. Gross margin shows the efficiency of production or sourcing; net margin shows the overall profitability of the business.
Start with your COGS per unit, then apply the formula: Selling Price = COGS / (1 - Target Gross Margin). To achieve a 40% gross margin on a product costing $60: Price = $60 / 0.60 = $100. This is different from markup, where you would multiply cost by (1 + markup rate). Mixing up the two approaches causes systematic underpricing.
