What this calculation means
Ingredient-scope gross margin expresses the selling-price remainder after ingredients as a percentage of selling price. Its denominator distinguishes it from markup.
Use the stated ingredient scope consistently; adding packaging changes the cost definition.
How to use this calculator
Enter the item’s selling price and ingredient cost on one serving basis. Keep price tax-exclusive and greater than zero.
Formula and variables
Ingredient-scope margin = (Selling price − Ingredient cost) ÷ Selling price × 100
- Selling priceUSD
- Price charged for the serving or item.
- Ingredient costUSD
- Ingredient cost only. Packaging is separate.
The percentage display uses one decimal place. Intermediate ratios retain their precision before the displayed result is rounded.
Understand your result
The percentage is the price share remaining after ingredients only. It is not a net margin after all costs.
Worked example
Selling price is $15 and ingredient cost is $4.50.
Selling price: 15 USD
Ingredient cost: 4.5 USD
- The remainder after ingredients is $15 − $4.50 = $10.50.
- Divide $10.50 by $15 and multiply by 100 = 70.0%.
Example result: 70.0%
Frequently asked questions
How is this different from markup?
Margin divides the remainder by selling price. Markup divides the remainder by cost. The same cost and price therefore produce different percentages.
Can the margin be negative?
Yes. It is negative when the ingredient cost exceeds the positive selling price on this scope.