Sales margin calculation formula is derived with three categories such as gross profit, gross profit margin ratio and revenue. Gross profit rate formula is defined as (Revenue - Cost of Goods Sold) . To do so, just subtract the cost of goods sold (COGS) from the total revenue. To find the sales margin ratio, you need to divide the resulting value (i.e) gross profit rate value by 100. To find the total revenue, subtract the Sales Returns from the net sales value.

Gross Profit Margin Ratio = (Gross Profit / Revenue) × 100

Revenue = Net Sales - Sales Returns

Gross margin is the metric tool that measures the total money left over after paying the cost of goods sold. The above gross profit rate formula calculates Revenue from net sales and sales returns. You can also switch over to the online calculator provided above for ease calculations with an example.