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How to calculate gross margin in Excel and Google Sheets
Topic:Finance basicsExcel & Google Sheets
=(B2-A2)/B2✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Cost | Price |
| 60 | 100 |
=(B2-A2)/B2→0.4
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Step by step
- 1Subtract cost from price to get profit: B2-A2.
- 2Divide by the price (B2) — margin is relative to revenue, not cost.
- 3Format as a percentage to read it (e.g. 0.4 = 40%).
Tips
- Markup divides by cost; margin divides by price — don't mix them up.
- Use IFERROR to handle rows where price is blank or zero.
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Frequently asked
What's the difference between margin and markup?
Margin is profit ÷ price; markup is profit ÷ cost. The same dollar profit gives a smaller margin than markup.
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