KKPI Formulas
Finance KPI Formula

Gross Margin Formula

Gross margin shows the percentage of revenue left after subtracting the direct cost of goods or services sold.

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Simple formula

(Revenue - Cost of Goods Sold) / Revenue

The formula uses these inputs:

  • Revenue: enter your value in the calculator or spreadsheet.
  • Cost of Goods Sold: enter your value in the calculator or spreadsheet.

Excel formula

Use this Excel formula as a starting point. Replace the sample cell references with the cells in your worksheet.

=IFERROR((B2-C2)/B2,0)

Google Sheets formula

In most cases, the Google Sheets version uses the same structure as Excel.

=IFERROR((B2-C2)/B2,0)

Power BI DAX measure

Use this DAX pattern as a starting point and rename measures or columns to match your Power BI model.

Gross Margin =
DIVIDE(
    [Revenue] - [Cost of Goods Sold],
    [Revenue]
)

SQL example

This generic SQL pattern can be adapted to your warehouse table names and column names.

SELECT
    (revenue - cost_of_goods_sold) / NULLIF(revenue, 0) AS gross_margin
FROM kpi_data;

Gross Margin calculator

Result—

How to interpret Gross Margin

Use this KPI with trend data, targets, and related metrics. A single value is less useful than a consistent definition tracked over time.

Important: KPI definitions can vary by company, accounting policy, analytics platform, or reporting standard. Keep the definition consistent when comparing periods.

Common mistakes

  • Mixing different time periods in the numerator and denominator.
  • Using totals that do not match the KPI definition used by your company.
  • Comparing results across teams or industries without context.

Related KPI formulas

Frequently asked questions

What is the Gross Margin formula?

The common Gross Margin formula is: (Revenue - Cost of Goods Sold) / Revenue.

How do you calculate Gross Margin in Excel?

Use this Excel formula pattern: =IFERROR((B2-C2)/B2,0). Replace the cell references with your own data.

Can this KPI be calculated in Power BI?

Yes. Use the DAX measure on this page as a starting point and adjust table and column names to match your model.