This study analyzes the economic performance and factors influencing gross margins among 291 smallholder tomato farmers across three Ethiopian regions: Oromia, Amhara and Sidama. Vegetable production is a significant income-generating activity for smallholder farmers in Ethiopia; however, productivity remains low compared to neighboring countries. Using cluster analysis methods, farmers were grouped based on production intensity and profitability. The findings reveal significant disparities between the clusters, with high-performing farmers achieving a gross margin of 138,434 ETB/ha, compared to 113,753 ETB/ha for low-performing farmers. Key determinants of productivity include the use of improved seed varieties, irrigation, mineral fertilizers and staking practices. While 90% of high-performing farmers used improved seeds, only 21% of the low-performing group adopted this practice. Furthermore, the study identifies limited access to quality inputs and small production areas as major barriers to productivity. These results highlight the need for targeted policy interventions to enhance input availability and support the adoption of advanced farming techniques. The study provides valuable insights for policymakers aiming to boost agricultural productivity and improve the economic well-being of smallholder farmers in Ethiopia.