Business Finance
Gross Profit Calculator
Calculate gross profit and gross margin percentage from revenue and cost of goods sold in seconds.
🔒 All calculations happen instantly in your browser. No data is sent to any server.
How the calculation works
Gross Profit = Revenue − Cost of Goods Sold (COGS)
Gross Margin % = (Gross Profit ÷ Revenue) × 100
Example: Revenue $200,000 · COGS $120,000
Gross Profit = $80,000 · Gross Margin = 80,000 ÷ 200,000 = 40%
Frequently Asked Questions
- Gross profit shows how much revenue remains after covering the direct costs of producing your product or service. It funds all your other expenses — salaries, marketing, rent — and eventually profit.
- COGS includes direct production costs: raw materials, direct labour, manufacturing overhead, and inbound freight. It excludes operating expenses like marketing, office rent, and management salaries.
- Software and SaaS: 60–80%. Retail: 25–50%. Manufacturing: 25–35%. Restaurants: 60–70% (on food cost alone). Always compare against your industry peers.
- Gross profit only deducts COGS from revenue. Net profit deducts everything — operating expenses, interest, and taxes. A business can have strong gross profit but poor net profit if overhead is high.
- Yes — if COGS exceeds revenue, gross profit is negative. This means each unit sold costs more to make than it earns, which is unsustainable and signals a pricing or cost problem.