Finance tool
Gross Profit CalculatorCalculate Gross Profit, Margin & Markup
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Step-by-step breakdown

Use this free gross profit calculator to find out how much profit you make after deducting the direct costs of goods sold. Enter your revenue and COGS to instantly see your gross profit, gross margin, and markup.

Results appear instantly, with a full step-by-step breakdown showing every formula and substituted value.
Sales Details
Revenue / net sales ($)
Cost of goods sold - COGS ($)
With revenue of $50,000.00 and COGS of $30,000.00, your gross profit is $20,000.00, representing a gross margin of 40.00%.
Gross Profit
$20,000.00
on $50,000.00 revenue
40.00%
Gross Margin %
66.67%
Markup %
$30,000.00
COGS
COGS 60%Gross Profit 40%
Revenue$50,000
COGS — $30,000.00 (60%)
Gross Profit — $20,000.00 (40%)
Getting started
How to use this gross profit calculator

This tool quickly calculates gross profit, margin, and markup based on standard accounting formulas. It works for both single product sales and overall business periods.

1
Enter your revenue or selling price
Input total revenue from sales for a period (month, quarter, year) or a single product's selling price.
2
Enter cost of goods sold (COGS)
Input the direct costs to produce or acquire the goods sold: materials, manufacturing, direct labor, and shipping-in.
3
Review your gross profit
Your gross profit amount, gross margin %, and markup % appear instantly on the right.
4
Analyze the visual breakdown
The ratio bar and donut chart show exactly what percentage of every revenue dollar goes to COGS versus what stays as gross profit.
The calculation
Step-by-step calculation breakdown

Here is exactly how the calculator derived your results using standard pricing formulas. Each step shows the formula and the substituted values.

1
Calculate Gross Profit
Gross Profit = Revenue - COGS = $50,000.00 - $30,000.00
Gross Profit = $20,000.00
2
Calculate Gross Margin %
Gross Margin % = (Gross Profit / Revenue) * 100 = ($20,000.00 / $50,000.00) * 100
Gross Margin = 40.00%
3
Calculate Markup %
Markup % = (Gross Profit / COGS) * 100 = ($20,000.00 / $30,000.00) * 100
Markup = 66.67%
Examples
Worked examples

Three common scenarios calculated with exact numbers. Use these as a reference point, then adjust the calculator above to match your own situation.

Product business
Monthly gross profit
$80k Revenue · $48k COGS
$32,000 profit
40% Gross Margin
Service business
Consulting project
$15k Revenue · $6.5k Labor
$8,500 profit
56.7% Gross Margin
Thin-margin retail
High volume sales
$200k Revenue · $168k COGS
$32,000 profit
16% Gross Margin
Understanding
Understanding gross profit
What gross profit actually measures

Gross profit answers the most fundamental question in business: after paying the direct cost of producing a product or delivering a service, how much money is left? It strips away the complexity of operating expenses, interest, and taxes to show whether your core product economics are sound. A healthy gross profit provides the pool of money from which all other expenses are paid.

Gross profit vs. net profit

Gross profit deducts only COGS from revenue - it does not include operating expenses like office rent, employee salaries, marketing spend, or taxes. Net profit deducts all of these. A business can have excellent gross profit but poor net profit if overhead is high. Understanding gross profit first helps identify whether the core product economics are sound before analyzing operating efficiency.

Industry gross margin benchmarks
IndustryTypical gross margin
Software / SaaS70-85%
Professional services50-65%
eCommerce / DTC35-55%
Manufacturing25-40%
Wholesale / Distribution20-35%
Grocery retail20-30%
Restaurants (food cost only)60-70%
Strategy
How to improve your gross profit

There are two fundamental levers for improving gross profit: increase revenue at the same or higher price point, or reduce COGS. Here are the most effective strategies:

Reduce Cost of Goods Sold
Negotiate better terms with suppliers, buy in bulk, or optimize your supply chain. Even a 5% reduction in COGS can dramatically increase your overall margin.
Increase your pricing
Raising prices is the fastest way to improve gross margin, as 100% of the price increase flows directly to gross profit. Focus on communicating value rather than competing purely on price.
Optimize product mix
Focus marketing and sales efforts on your highest-margin products or services rather than low-margin loss leaders.
FAQ
Frequently asked questions
Q
What is gross profit?
Gross profit is the amount of money left after subtracting the direct cost of goods sold (COGS) from total revenue. It is the 'top-line profitability' metric - it measures how efficiently a business produces its goods or services before overhead costs like rent, salaries, and marketing are considered. Formula: Gross Profit = Revenue - COGS.
Q
What is gross profit margin?
Gross profit margin (or gross margin) expresses gross profit as a percentage of revenue: Gross Profit Margin = (Gross Profit / Revenue) x 100. It tells you what percentage of each revenue dollar remains after covering production costs. A 45% gross margin means $0.45 of every dollar in sales is retained as gross profit, before operating expenses are deducted.
Q
What is the difference between gross profit and net profit?
Gross profit only deducts the direct cost of goods sold from revenue. Net profit deducts everything - COGS, operating expenses (rent, utilities, salaries), interest, and taxes. Gross profit is the starting point for profitability analysis; net profit is the final 'bottom line'. A business can have healthy gross profit but negative net profit if overhead costs are high relative to sales volume.
Q
What is the difference between gross profit and gross revenue?
Gross revenue (or total revenue) is the total amount earned from sales before any deductions. Gross profit is revenue minus the direct cost of goods sold. Gross revenue is always higher than or equal to gross profit. For example, $100,000 in sales with $60,000 COGS -> $100,000 gross revenue and $40,000 gross profit.
Q
What is a good gross profit margin?
Benchmarks vary widely by industry. Software and SaaS companies typically achieve 70-85% gross margins. Professional services: 40-60%. eCommerce and direct-to-consumer brands: 30-50%. Manufacturing: 25-40%. Grocery retail: 20-30%. Restaurants: 60-70% on food alone (but net margins are far tighter after labor and overhead). The right benchmark depends on your specific industry.
Q
How do I increase gross profit?
There are two levers: increase revenue or reduce COGS. On the revenue side: raise prices, shift to higher-margin products, or increase volume. On the cost side: negotiate better supplier pricing, reduce material waste, improve production efficiency, or consolidate orders. A small improvement in gross margin percentage translates to significant profit dollars at scale - a 2% margin improvement on $500,000 in revenue = $10,000 more gross profit.
Q
What is the difference between gross margin and markup?
Gross margin and markup both express profitability but relative to different bases. Gross margin = (Gross Profit / Revenue) x 100 - it is a percentage of selling price. Markup = (Gross Profit / COGS) x 100 - it is a percentage of cost. For the same product, markup is always higher than margin. A 40% gross margin equals a 66.7% markup. Confusing them leads to systematically mispriced products.
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