Select the margin type: gross margin, operating margin, net margin, or contribution margin
Gather inputs: revenue (sales) and the relevant cost/expense measure (COGS, operating expenses, total expenses)
Calculate gross margin:
Gross margin = (Revenue − COGS) / Revenue
Calculate operating margin:
Operating margin = Operating income / Revenue
Calculate net margin:
Net margin = Net income / Revenue
Calculate contribution margin:
Contribution margin = (Revenue − Variable costs) / Revenue
Convert to a percentage if needed:
Margin (%) = Margin × 100
If using dollars for the margin amount instead of ratio:
Gross profit = Revenue − COGS
Operating income = Revenue − COGS − Operating expenses
Net income = Revenue − Total expenses
Contribution margin (dollars) = Revenue − Variable costs