This average gross margin calculator will help you to estimate the weighted average gross margin for a business. The margin represents the difference between the cost of producing or delivering a product and the price at which it sells.
Generally a business will have a number of product lines and know the margin (GM%) on each. Consequently to calculate the average GM% for the business it is necessary to weight each product GM% by its corresponding revenue.
Accordingly the Excel sheet, available for download below, helps a business calculate the weighted average gross margin by entering GM% and revenue for up to ten product lines.
In the example shown above the weighted average GM% for the 10 products the business sells is 59.4%
Additionally our tutorial on gross profit formula gives full details about how to calculate the GM% for a business.
Average Gross Margin Calculator Download
The average gross margin calculator is available for download in Excel format by following the link below.
Average Gross Margin Calculator Download Link
Summary
In summary, a weighted average GM% calculator is a powerful tool for businesses to assess their overall profitability and make informed decisions about pricing and product mix. By understanding which products are contributing the most to overall profitability, businesses can adjust their strategies to optimize profitability and growth.
Notes and major health warnings
Users use this accounting template at their own risk. We make no warranty or representation as to its accuracy. Additionally we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of an accounting format that you might use. It is purely illustrative. This is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the template, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.