In our daily calculation and management work, we need to evaluate the Sales Margin of different products and services. If you are curious to know how you can calculate the Sales Margin in Excel, this article may come in handy for you. In this article, we are going to show how you can calculate the Sales Margin in Excel with elaborate explanations.

**Table of Contents**Expand

## Overview of Sales Margin

**Definition**

The Sales Margin, also known as the contribution margin is the percentage of people make from selling product or service, with respect to the revenue. Usually calcularted in per unit account.

**General Formula**

## How to Calculate Sales Margin in Excel: Step-by-Step Procedure

For the demonstration purpose, we are going to use the below dataset. In this table, all the costs related to the calculation of the Sales Margin like the Fixed Cost, Variable Cost, and Revenue are presented.

### Step 1: Prepare Dataset

First and foremost, we need to prepare our dataset properly to prevent any kind of unwarranted and corrupted results.

We need to first prepare a separate table for the calculator of Variable Cost and Fixed Costs. After then we can calculate the sales margin.

### Step 2: Calculate Profit

Right after we prepare the dataset, we will calculate the **Profit. **

- In the beginning, select the cell
**G5**and enter the following formula:

`=F5-E5`

Doing this will show the **Profit **for the month of **January **(cell **B5**) in cell **G5.**

- After that, drag the
**Fill Handle**from the corner of cell**G5**to the corner of cell**G16.**

Doing this will fill the range of cells **G5:G16** with the **Profit** value for each month in the range of cells **B5:B16.**

### Step 3: Calculate Sales Margin

Finally, we will calculate the **Sales Margin** using the **Profit** calculated in the previous step.

- Select cell
**H5**and enter the following formula:

`=G5/F5`

- Doing this will show the
**Sales Margin**for the month of**January**in cell**H5.**

** **

- After that, drag the
**Fill Handle**from the corner of cell**H5**to the corner of cell**H16**. - Doing this will fill the range of cells
**H5:H16**with the**Sales Margin**value for each month in the range of cells**B5:B16**.

**💬 Note**

Here, you can see some sales margin in a negative sign. This means there were no profits actually. It basically indicates the losses. On the other hand, if there is a positive sales margin, then the font will change back to black.

## How to Calculate Gross Margin in Excel

In this method, we will discuss how we can determine the **Gross Margin** in Excel. We also used** the SUM function** in this method.

**General Formula**

** **

Now, follow these steps to calculate gross margin using the above formula.

**Step 1: Prepare Dataset**

First and foremost, we need to prepare our dataset properly to prevent any kind of unwarranted and corrupted results. We need to first prepare a separate table for the calculator of **Variable Cost** and **Fixed Costs**. After then we can calculate the **Gross Profit** margin.

**Step 2: Calculate Total Fixed Cost**

After preparing the Dataset, we jump straight into calculating the **Total Fixed Cost.**

- Then we will select the cell
**C13**and enter the following formula:

`=SUM(C6:C11)`

- Doing this will calculate the sum of the
**Fixed Cost**mentioned in the range of cells**C6:C13.**

**Step 3: Calculate Total Variable Cost**

After calculating the **Fixed Cost,** the **Total Variable Cost **will be determined.

- We will select the cell
**C12**and enter the following formula:

`=SUM(C6:C11)`

- Doing this will calculate the sum of the
**Variable Cost**mentioned in the range of cells**C6:C11.**

**Step 4: Calculate Total Cost**

We now calculate the **Total Cost** from the** Variable Cost** and **Fixed Cost** calculated in earlier steps.

- We will select the cell
**C16**and enter the following formula:

`=SUM(C12,F13)`

Cell **C16** will now have the **Total Cost** from the summation of **Variable Cost** and the **Fixed Cost.**

** **

**Step 5: Calculate Profit**

We now calculate the **Profit** from the** Total Cost in **cell **C16 **and the **Revenue **in cell **C17.**

- Select the cell
**C18**and enter the formula:

`=C17-C16`

Now we can see the **Profit** value in cell **C18**.

**Step 6: Calculate Gross Margin**

In this final step, we are going to evaluate the **Gross Margin** in cell **C19.**

- Select the cell
**C19**and enter the formula:

`=C18/C17`

Now we can see the **Gross Margin **value in cell **C18.**

## How to Use Reverse Gross Margin Formula in Excel

We will determine how we can extract **Revenue** and** Profit **from the **Gross Margin **in Excel.

**Step 1: Prepare Dataset**

First and foremost, to prevent any unwarranted results and for the sake of clarity, we need to prepare the dataset properly.

- At first, you need to have all the necessary information related to the calculation of the revenue from the Gross margin
- In the dataset shown below, we have the Variable Cost, and Fixed Cost listed for each month.
- We also set the Gross Margin that we need to achieve with the given Total Costs.
- Now we need to estimate the revenue that we need to generate in order to meet the Gross Margin requirement mentioned in the range of cells
**F5:F16.**

**Step 2: Calculate Revenue from Gross Margin**

Right after we prepare the dataset, we will calculate the **Revenue.**

- Select the cell
**G5**and enter the following formula:

`=1/(1-F5)*E5`

- After that, drag the Fill Handle from the corner of cell
**G5**to the corner of cell**G16.**

Doing this will fill the range of cells **G5:G16** with the **Revenue **value for each month in the range of cells **B5:B16.** Which we need to generate to meet the **Gross Margin** requirement mentioned in the range of cells **F5:F16.**

** **

**Step 3: Calculate Profit**

Furthermore, we will calculate the **Profit** after getting the **Revenue** value in the previous step.

- Select the cell
**G5**and enter the following formula:

`=G5-E5`

- Doing this will calculate the
**Profit**for the month of**January.**

- After that, drag the Fill Handle from the corner of cell
**H5**to the corner of cell**H16.** - Doing this will fill the range of cells
**H5:H16**with the**Profit**value for each month in the range of cells**B5:B16.**Which will be generated to meet the**Gross Margin**requirement mentioned in the range of cells**F5:F16.**

** **

**Download Practice Workbook**

Download this practice workbook below.

## Conclusion

To sum it up, the question “how to calculate Sales Margin in Excel” is answered here in 3 separate steps with elaborate explanations. Additionally, at the same time, we also estimated the Gross Margin and the Revenue from the Gross Margin via the reverse Gross Margin method.

For this problem, a workbook is available for download where you can practice these methods.

Feel free to ask any questions or feedback through the comment section. Any suggestion for the betterment of the Exceldemy community will be highly appreciated

**<< Go Back to Margin | Formula List | Learn Excel**