How do I calculate gross profit margin?

We are often asked how to calculate gross profit margin (gross profit expressed as a percentage). Here is the formula:
Gross Margin = (Income – Cost of Goods Sold) / Income x 100

Here is the gross profit margin calculation expressed in absolute terms:
Gross Margin = Income – Cost of Goods Sold + Income x 100

Gross Profit Margin Calculation Example:

A motor sells costs you $35.00 and you sell it for $125.00. Your gross profit margin (gross margin) is

Step One: $125.00 – $35.00 = $90.00.

Step Two: $90.00 divided by $125.00 = .72

Step Three: .72 x 100 = 72

Gross Profit Calculation Notes

1. Gross Profit Margin is the same thing as Gross Profit; just expressed as a percentage.
2. In our example, Income is the same things as the price you are selling the item for.
3. Cost of Goods Sold is the price you paid for the item.
4. Please also check out this free price calculator: Labor and Parts Break-Even Price Calculator
5. See these related articles: How to Calculate Selling Price (retail price) and Margin versus Markup