How do you calculate gross margin?

Subtract finished goods cost from sales value to get gross margin dollars, then divide by the reference sales value and multiply by 100. With $18,500 sales and $12,600 cost: $5,900 / $18,500 = 31.9%.

What is a good gross margin for roasted coffee or tea?

Wholesale roasted coffee often runs 25-40% gross, while retail bags and specialty tea can exceed 50%. The example's 31.9% is a typical wholesale figure — workable, but thin if freight and overhead are heavy.

What is the difference between margin and markup?

Margin is profit as a percent of sales (31.9% here); markup is profit as a percent of cost. The same $5,900 on $12,600 cost is a 46.8% markup but only a 31.9% margin — confusing the two routinely underprices an order.

Why is my real margin lower than this number?

This is gross margin. It excludes freight to the customer, broker or selling costs, and plant overhead. Net margin after those can be 10-20 points lower, so never set price off gross margin alone.

How does green coffee price affect margin?

Finished goods cost is dominated by green or raw input. A 10% green price jump on this order would push cost from $12,600 toward $13,860, cutting gross margin from 31.9% to roughly 25% unless price moves — which is why margin is re-run at every contract.

What sales value do I use for the reference?

Use the order or SKU sales value the margin should be measured against — usually the same sales figure in the gross-margin numerator. Keeping them aligned, as in the example where both are $18,500, gives a clean margin-on-sales percentage.

Coffee, Tea, Roasting & Dry Goods Processing calculator

Margin Calculator

Margin is the gross profit a coffee, tea, or dry-goods order keeps after the fully-loaded cost of the finished goods is subtracted, expressed as a percentage of sales. Roastery owners, category managers, and quoting teams use it to confirm that a SKU or order actually earns enough to cover overhead and profit after green or raw cost, roast loss, packaging, and labor. Because commodity input prices swing hard, margin is the metric that tells you whether a price still holds or needs a revision before the next green contract. A margin that looks healthy on paper can evaporate the moment shrink or packaging cost is understated.

What this calculator does

Calculate product margin percentage from sales value, finished goods cost, and reference sales value.
checking margin on coffee, tea, roasting, or dry goods orders
It computes gross margin dollars as sales value minus finished goods cost, then divides by a reference sales value to give margin percent.

Formula used

Gross margin dollars = order or SKU sales value - finished goods cost
Margin = gross margin dollars ÷ reference sales value × 100

Inputs explained

Order or SKU sales value:
Finished goods cost:
Reference sales value for the margin base:

How to use the result

Use it when quoting an order, reviewing SKU profitability, or testing whether a price still holds after a green-coffee or packaging cost increase.
It is a gross figure only — it excludes freight, selling, and overhead, so a strong gross margin does not guarantee the order is profitable after operating costs.

Common questions

How do you calculate gross margin? Subtract finished goods cost from sales value to get gross margin dollars, then divide by the reference sales value and multiply by 100. With $18,500 sales and $12,600 cost: $5,900 / $18,500 = 31.9%.
What is a good gross margin for roasted coffee or tea? Wholesale roasted coffee often runs 25-40% gross, while retail bags and specialty tea can exceed 50%. The example's 31.9% is a typical wholesale figure — workable, but thin if freight and overhead are heavy.
What is the difference between margin and markup? Margin is profit as a percent of sales (31.9% here); markup is profit as a percent of cost. The same $5,900 on $12,600 cost is a 46.8% markup but only a 31.9% margin — confusing the two routinely underprices an order.
Why is my real margin lower than this number? This is gross margin. It excludes freight to the customer, broker or selling costs, and plant overhead. Net margin after those can be 10-20 points lower, so never set price off gross margin alone.
How does green coffee price affect margin? Finished goods cost is dominated by green or raw input. A 10% green price jump on this order would push cost from $12,600 toward $13,860, cutting gross margin from 31.9% to roughly 25% unless price moves — which is why margin is re-run at every contract.

Last reviewed 2026-05-12.