Analyze gross margins by product line, customer segment, or time period with contribution margin and product mix charts.
Gross Margin Analyzer takes revenue and cost-of-goods-sold figures for each product line, customer segment, or time period and returns gross profit, gross margin percentage, and an overall figure for the whole batch, with product mix charts that show how each line's share of revenue compares with its share of profit. Add variable costs and it also reports contribution margin. The result users misread most often: the overall margin is not the average of the line margins. It is revenue-weighted, so growth in a low-margin line can drag the total down even while every line stays profitable on its own.
A concrete input and expected output from the current implementation.
Input
Product line | Revenue | COGS Widgets | 120000 | 72000 Gadgets | 80000 | 40000 Doohickeys | 50000 | 40000
Expected output
Per line - Widgets: gross profit $48,000, margin 40%; Gadgets: $40,000, 50%; Doohickeys: $10,000, 20%. Overall - revenue $250,000, gross profit $98,000, margin 39.2%. Mix chart - revenue shares 48% / 32% / 20%, profit shares 49% / 41% / 10%.
The overall margin is the revenue-weighted mean of the line margins (40% x 48% + 50% x 32% + 20% x 20% = 39.2%), not their simple average of 36.7%. Doohickeys earns 20% of revenue but only about 10% of gross profit, which is what the mix chart makes visible.
Each row you enter yields gross profit (revenue minus cost of goods sold) and gross margin (gross profit divided by revenue). When a row includes variable costs, the tool also reports contribution margin (revenue minus variable costs, divided by revenue). The batch total is the sum of gross profits divided by the sum of revenues - a weighted result, not an average of the row percentages.
The tool builds mix charts from the same rows: each line's share of total revenue plotted against its share of total gross profit, so lines that earn less than their revenue weight stand out immediately. The same math applies within any grouping you choose - product line, customer segment, or time period - and the overall figure is recomputed for every group.
Because the overall margin weights each line by its revenue, not equally. If the high-margin line carries most of the revenue, the total sits closer to its margin; averaging the lines treats each as equally important, which is why the two numbers differ. The gap between them is exactly the mix effect the tool charts.
No. Gross margin stops at cost of goods sold, so fixed operating costs are not in the result. Contribution margin comes closer, but only for costs you classify as variable - rent and salaries typically stay out. For the bottom line after all operating costs, you need operating margin, which this tool does not compute.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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