--- title: Gross Margin Explained with Calculation & Definition description: Calculate Gross Margin ✓ English ✓ Example ✓ Score ✓ Gross Margin ✓ Definition ✓ Screener ⇒ Read now! image: https://blog.stocksguide.com/hubfs/Bruttomarge%20%5BEN%5D.jpg --- [![StocksGuideFianl](https://blog.stocksguide.com/hubfs/StocksGuideFianl.svg "StocksGuideFianl")](https://stocksguide.com/en) - [Portfolios](https://stocksguide.com/en/portfolios) - [Screener](https://stocksguide.com/en/screener) - [Charts](https://stocksguide.com/en/charts) - [Alerts](https://stocksguide.com/en/stock-metric-alerts) - Tools - Discover stocks - [Stock Screener](https://stocksguide.com/en/screener) - [Indices](https://stocksguide.com/en/indices) - [Sectors](https://stocksguide.com/en/sectors) - [Dividend-Topscorer](https://stocksguide.com/en/dividends-strategy/topscorer) - [Growth-Topscorer](https://stocksguide.com/en/high-growth-investing/topscorer) - [Levermann-Topscorer](https://stocksguide.com/en/levermann-strategy/topscorer) - Analyze stocks - [Charting](https://stocksguide.com/en/charts) - [Dividend Calender](https://stocksguide.com/en/dividends-calendar) - [Earnings Calender](https://stocksguide.com/en/earnings-calendar) - [Dividends-Strategy](https://stocksguide.com/en/dividends-strategy) - [Growth-Strategy](https://stocksguide.com/en/high-growth-investing/strategy) - [Levermann-Strategy](https://stocksguide.com/en/levermann-strategy) - Monitor stocks - [Dashboard](https://stocksguide.com/en) - [HGI Watchlist](https://stocksguide.com/en/high-growth-investing/high-growth-investing-watchlist) - [Aristocrats](https://stocksguide.com/en/dividend-aristocrats) - [Notifications](https://stocksguide.com/en/users/edit#notifications) - [Hig-Tech-Wikifolio](https://stocksguide.com/en/high-growth-investing/high-tech-stock-picking-wikifolio) - [Elite Dividend Stocks](https://stocksguide.com/en/continuity-toplists/listen) - [Blog](https://blog.stocksguide.com) - [Portfolios](https://stocksguide.com/en/portfolios) - [Screener](https://stocksguide.com/en/screener) - [Charts](https://stocksguide.com/en/charts) - [Alerts](https://stocksguide.com/en/stock-metric-alerts) - Tools - Discover stocks - [Stock Screener](https://stocksguide.com/en/screener) - [Indices](https://stocksguide.com/en/indices) - [Sectors](https://stocksguide.com/en/sectors) - [Dividend-Topscorer](https://stocksguide.com/en/dividends-strategy/topscorer) - [Growth-Topscorer](https://stocksguide.com/en/high-growth-investing/topscorer) - [Levermann-Topscorer](https://stocksguide.com/en/levermann-strategy/topscorer) - Analyze stocks - [Charting](https://stocksguide.com/en/charts) - [Dividend Calender](https://stocksguide.com/en/dividends-calendar) - [Earnings Calender](https://stocksguide.com/en/earnings-calendar) - [Dividends-Strategy](https://stocksguide.com/en/dividends-strategy) - [Growth-Strategy](https://stocksguide.com/en/high-growth-investing/strategy) - [Levermann-Strategy](https://stocksguide.com/en/levermann-strategy) - Monitor stocks - [Dashboard](https://stocksguide.com/en) - [HGI Watchlist](https://stocksguide.com/en/high-growth-investing/high-growth-investing-watchlist) - [Aristocrats](https://stocksguide.com/en/dividend-aristocrats) - [Notifications](https://stocksguide.com/en/users/edit#notifications) - [Hig-Tech-Wikifolio](https://stocksguide.com/en/high-growth-investing/high-tech-stock-picking-wikifolio) - [Elite Dividend Stocks](https://stocksguide.com/en/continuity-toplists/listen) - [Blog](https://blog.stocksguide.com) Search Search - [Contact Us](https://stocksguide.com/en/contacts/new) - [Contact Us](https://stocksguide.com/en/contacts/new) Search Search ![Gross Margin Explained with Calculation & Definition](https://blog.stocksguide.com/hubfs/Bruttomarge%20%5BEN%5D.jpg) Feb 17, 2022 | [Knowledge](https://blog.stocksguide.com/topic/knowledge) # Gross Margin Explained with Calculation & Definition The gross margin is the percentage of sales that remains after deducting direct production costs. We explain everything you need to know about the gross margin: What is it? [Oscar Leistikow](https://blog.stocksguide.com/author/oscar-leistikow) Share - [mailto:?&subject=Gross%20Margin%20Explained%20with%20Calculation%20&%20Definition&body=Gross%20Margin%20Explained%20with%20Calculation%20&%20Definition%0A(https%3A%2F%2Fblog.stocksguide.com%2Fknowledge%2Fgross-margin-explained-with-calculation-definition)](mailto:?&subject=Gross%20Margin%20Explained%20with%20Calculation%20&%20Definition&body=Gross%20Margin%20Explained%20with%20Calculation%20&%20Definition%0A(https%3A%2F%2Fblog.stocksguide.com%2Fknowledge%2Fgross-margin-explained-with-calculation-definition)) - - - **Table of Contents** 1. [What is Gross Margin?](https://blog.stocksguide.com/knowledge/gross-margin-explained-with-calculation-definition#what-is-gross-margin) 2. [How is Gross Margin Calculated?](https://blog.stocksguide.com/knowledge/gross-margin-explained-with-calculation-definition#How-is-Gross-Margin-Calculated) 3. [What Does Gross Margin Indicate?](https://blog.stocksguide.com/knowledge/gross-margin-explained-with-calculation-definition#What-Does-Gross-Margin-Indicate) 4. [Top 10 stocks with the highest gross margin worldwide](https://blog.stocksguide.com/knowledge/gross-margin-explained-with-calculation-definition#Top-100-stocks-with-the-highest-gross-margin-world) #### **What is Gross Margin?** Gross Margin is the percentage of revenue remaining after subtracting the direct costs of production. Also known as gross profit margin, it provides an initial impression of a company's potential profitability, even if the company is not yet profitable overall. Software companies typically have higher gross margins due to lower production costs. Gross Margin = Gross Profit / Revenue​ Higher gross margins indicate more profitable operations. The comparison of the car manufacturer Tesla, the home improvment store Home Depot and the software giant Microsoft illustrates how different the gross margin can be: ![](https://blog.stocksguide.com/hs-fs/hubfs/image-png-Sep-13-2024-08-25-51-4909-AM.png?width=700&height=442&name=image-png-Sep-13-2024-08-25-51-4909-AM.png) #### **How is Gross Margin Calculated?** Gross Margin is calculated by subtracting direct costs (COGS) from revenue and then dividing by revenue. Gross Margin = (Revenue−Direct Costs) / Revenue **Example Calculation (Okta):**  ![Berechnung Bruttomarge](https://blog.stocksguide.com/hs-fs/hubfs/Berechnung%20Bruttomarge.jpg?width=884&height=196&name=Berechnung%20Bruttomarge.jpg)   The following chart shows the development of the gross margin of Zscaler, Qualys and Okta shares: ![](https://blog.stocksguide.com/hs-fs/hubfs/image-png-Sep-13-2024-08-27-23-6549-AM.png?width=700&height=441&name=image-png-Sep-13-2024-08-27-23-6549-AM.png) **Scoring in High-Growth-Investing Strategy:** ![Bruttomarge Punkte](https://blog.stocksguide.com/hs-fs/hubfs/Bruttomarge%20Punkte.jpg?width=884&height=196&name=Bruttomarge%20Punkte.jpg) Okta receives 3 points with a Gross Margin of 76%. Note: You should monitor the development of the gross margin. Rising gross margins are positive. #### **What Does Gross Margin Indicate?** Gross Margin indicates the percentage of revenue remaining after direct production costs, reflecting a company's cost efficiency and profitability. Higher gross margins mean more capital for other areas like marketing, sales, and R&D. It appears before EBITDA, EBIT, and net profit in the income statement. **Monitoring Gross Margin:** Consistently rising or stable gross margins are positive indicators. Falling gross margins suggest increasing costs outpacing revenue, limiting funds for crucial areas. ![](https://blog.stocksguide.com/hs-fs/hubfs/image-png-Sep-13-2024-08-28-15-1384-AM.png?width=700&height=268&name=image-png-Sep-13-2024-08-28-15-1384-AM.png) #### **What is a Good Gross Margin?** The definition of a good gross margin varies by industry. For example, automakers typically have margins below 25%, while top software companies can exceed 80%. Business models and revenue mix within the same industry can result in different gross margins. Hardware sales and services often have lower margins compared to software subscriptions.   [Read more knowledge articles](https://blog.stocksguide.com/tag/Knowledge) ![Oscar Leistikow](https://blog.stocksguide.com/hs-fs/hubfs/Oscar%20Leistikow.jpg?width=70&name=Oscar%20Leistikow.jpg) ### Written By: Oscar Leistikow Oscar Leistikow holds a Master's degree in Controlling and is at home in the world of numbers thanks to his many years of professional experience in the finance department of a DAX-listed company. He is fascinated by the capital markets and is an enthusiastic private investor himself. His aim is to pass on his knowledge of shares and the stock market and to develop StocksGuide into a leading tool for private investors. ## You May Also Like ### [![Gross Margin Explained with Calculation & Definition](https://blog.stocksguide.com/hubfs/EBIT-Marge%20%F0%9F%87%BA%F0%9F%87%B8.jpg) *Nov 03, 2021 | Knowledge* EBIT margin simply explained](https://blog.stocksguide.com/knowledge/ebit-margin-simply-explained) ### [![Gross Margin Explained with Calculation & Definition](https://blog.stocksguide.com/hubfs/ServiceNow%20US-1.jpg) *Aug 07, 2025 | HGI* ServiceNow stock analysis: Digitalization winner with AI potential](https://blog.stocksguide.com/servicenow-stock-analysis-digitalization-winner-with-ai-potential) ### [![Gross Margin Explained with Calculation & Definition](https://blog.stocksguide.com/hubfs/Free%20Cashflow%20Marge%20%5BEN%5D-1.jpg) *Apr 14, 2025 | Knowledge* Free Cashflow Margin simply explained](https://blog.stocksguide.com/knowledge/free-cashflow-margin-simply-explained) [View more blog posts](https://www.example.com) [![StocksGuideFianl](https://blog.stocksguide.com/hubfs/StocksGuideFianl.svg "StocksGuideFianl")](https://stocksguide.com/en) Binzallee 30, Zürich 8055 © 2024 aktien.guide AG - StocksGuide - [Features](https://stocksguide.com/en/product) - [Plans](https://stocksguide.com/en/premium) - Company - [About](https://stocksguide.com/en/about-us) - [Contact us](https://stocksguide.com/en/contacts/new) - [Privacy Policy](https://stocksguide.com/en/privacy-policy) - [Imprint](https://stocksguide.com/en/imprint) - Discover Stocks - [Blog](https://blog.stocksguide.com) - [Earnings Calendar](https://stocksguide.com/en/earnings-calendar) - [Dividend Calendar](https://stocksguide.com/en/dividends-calendar) - [Stock Screener](https://stocksguide.com/en/screener) - [Elite Dividend Stocks](https://stocksguide.com/en/continuity-toplists/listen) - [Dividend Aristocrats](https://stocksguide.com/en/dividend-aristocrats) - [Stocks](https://stocksguide.com/en/stocks) - [Glossary](https://lp.stocksguide.com/glossary) **Disclaimer** aktien.guide AG assumes no liability for the information presented, its accuracy and completeness. 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