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Blended Gross Margin Calculator

Enter revenue and COGS for two product lines to find the blended gross margin.

How it is calculated

The tool combines two product lines before dividing, so each line is weighted by its revenue. Total gross profit is (Rev A − COGS A) + (Rev B − COGS B), total revenue is Rev A + Rev B, and blended margin % = total gross profit ÷ total revenue × 100.

All four numbers are money amounts for the same period and currency (shown in dollars); COGS is the direct cost of the goods sold, not overheads. COGS cannot be negative and the combined revenue must be above zero, otherwise nothing is returned. It also shows the total gross profit and total revenue. The result is not the average of the two margin percentages, and it is the same whichever line you enter as A or B.

Worked example

Line A sells $80,000 with COGS of $32,000, a 60% margin. Line B sells $220,000 with COGS of $176,000, a 20% margin.

Gross profit: (80,000 − 32,000) + (220,000 − 176,000) = 48,000 + 44,000 = $92,000.00. Total revenue: 80,000 + 220,000 = $300,000.00. Blended margin = 92,000 ÷ 300,000 × 100 = 30.67%. A simple average of 60% and 20% would give 40%, which overstates profitability because most revenue comes from the low-margin line.

Try this example →

Common mistakes

  • Averaging the two margin percentages. The lines must be weighted by revenue, which is why the tool asks for amounts.
  • Entering margin percentages in the revenue or COGS fields. They take money amounts.
  • Putting operating expenses or overheads into COGS. Gross margin counts only the direct cost of the goods sold.
  • Using different periods for the two lines, such as a full year of line A against one quarter of line B.
  • Entering revenue net of discounts for one line and gross for the other, which makes the lines inconsistent.

Sources

About this calculator

When a company sells more than one product line, its overall profitability isn’t the average of each line’s margin percentage — it’s the blended gross margin: total revenue across all lines minus total cost of goods sold (COGS) across all lines, divided by total revenue. A high-margin line with low revenue can be outweighed by a low-margin line that sells in much higher volume.

Finance and operations teams at multi-product businesses use this figure to see true company-wide profitability rather than being misled by a simple average of margin percentages, which ignores each line’s revenue weight.

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Comments (1)

  • Editorial team

    The blended margin moves when the mix moves, even if each line's own margin stays put. In the defaults line A earns 40 percent and line B 25 percent, and the blend is 34.00 percent. If B grew to take more of the revenue, the blend would slide toward 25 even though neither line got worse. Do you track margin by line or only the company total?

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