Gross Profit Calculator

Calculate gross profit, gross profit margin, and markup from your revenue and cost of goods sold (COGS). Includes a margin comparison table for common scenarios.

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Margin and Markup

See gross profit margin and markup percentage side by side. Understand how they differ and use the comparison table to benchmark your business.

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Multiple Calculation Modes

Calculate from revenue and COGS, find the maximum COGS for a target margin, or determine the revenue needed from COGS and a target margin.

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Frequently Asked Questions

How do you calculate gross profit?
Gross profit is calculated by subtracting the cost of goods sold (COGS) from total revenue. The formula is: Gross Profit = Revenue - COGS. For example, if your business earns $100,000 in revenue and the cost of goods sold is $60,000, your gross profit is $40,000. This figure represents the money available to cover operating expenses, taxes, and net profit.
What is gross profit margin and why does it matter?
Gross profit margin is the percentage of revenue that remains after subtracting COGS. The formula is: Gross Profit Margin = (Gross Profit / Revenue) x 100. It matters because it shows how efficiently a business converts revenue into profit before operating expenses. A higher margin means more money is available for salaries, rent, marketing, and other overhead costs.
What is the difference between gross profit and net profit?
Gross profit only subtracts the direct costs of producing goods or services (COGS) from revenue. Net profit goes further by also subtracting operating expenses, interest, taxes, and all other costs. For example, a company with $100,000 revenue and $60,000 COGS has $40,000 gross profit. After $25,000 in operating expenses and $5,000 in taxes, the net profit is $10,000.
What is a good gross profit margin?
Good gross profit margins vary by industry. Software and SaaS companies typically achieve 70-90%, service businesses see 50-75%, retail businesses range from 25-50%, manufacturing averages 20-35%, and grocery stores operate on thin margins of 1-3%. Rather than targeting a universal number, compare your margin to competitors and industry averages to gauge performance.
What counts as cost of goods sold (COGS)?
COGS includes the direct costs of producing goods or delivering services. For a manufacturer, this includes raw materials, direct labor, and factory overhead. For a retailer, it is the wholesale cost of inventory. For a SaaS company, COGS typically includes hosting costs, customer support, and third-party software licenses. General overhead like rent, marketing, and administrative salaries are not part of COGS.