Pricing & Profit
Gross Profit Calculator
Calculate gross profit and gross profit margin from total revenue and cost of goods sold for a period.
Enter revenue and COGS for the same accounting period.
Enter your values
Total revenue for the period.
Direct costs of the goods or services sold in the same period.
Results
Gross profit
—
Enter revenue and cost of goods sold.
Gross profit margin
—
Gross profit as a percentage of revenue.
Revenue
—
Total revenue for the period.
Cost of goods sold
—
Direct costs for the same period.
Results are estimates based on the values entered and are provided for general planning.
Method
How to calculate gross profit
Gross profit is a business-level figure: total revenue for a period minus the total direct cost of the goods or services sold in that period. Expressed as a percentage of revenue it becomes gross profit margin, which lets you compare periods and businesses of different sizes. This differs from unit economics, where a single item's selling price is compared with its own cost.
Formula
Gross profit = Revenue − Cost of goods sold Gross profit margin = Gross profit ÷ Revenue × 100
Assumptions
- Revenue and COGS cover the same accounting period and the same products.
- COGS includes only direct costs of producing or purchasing what was sold.
- Operating expenses, interest, and tax are excluded — those sit below the gross profit line.
- Gross margin requires revenue above zero; with zero revenue the margin is shown as not applicable rather than infinite.
Gross profit and margin are calculated at full precision before display. Currency displays two decimals; margin displays two decimals.
How to interpret the result
Gross profit is the money available to cover operating expenses, interest, tax, and whatever profit remains. It is not net income. A negative gross profit means COGS exceeded revenue for the period — mathematically valid, and a signal that pricing, input costs, or inventory write-offs need attention. A falling margin with rising revenue usually points to discounting or input-cost inflation rather than a volume problem.
Gross profit versus net profit
Gross profit stops at direct costs. Net profit continues down the income statement through operating expenses, interest, depreciation, and tax. A business can post a healthy gross profit and still lose money overall.
Track both. Gross margin tells you whether pricing and production economics work; net margin tells you whether the whole operating structure is affordable at your current scale.
Why gross margin moves
Margin falls when input costs rise, when the sales mix shifts toward lower-margin products, or when discounting increases. It rises with price increases, supplier renegotiation, or a shift toward higher-margin lines.
Comparing the margin percentage across periods isolates these effects in a way the absolute gross profit figure cannot, because it removes the influence of sales volume.
Gross profit compared with related measures
Each measure stops at a different point on the income statement.
| Measure | Formula | What it shows |
|---|---|---|
| Gross profit | Revenue − COGS | What remains after direct costs, before operating expenses. |
| Contribution margin | Revenue − Variable costs | What remains after all variable costs, used for break-even analysis. |
| Net profit | Revenue − All costs | What remains after operating expenses, interest, and tax. |
Frequently asked questions
Keep calculating
Related calculators
Profit margin covers the same idea for a single product, contribution margin isolates variable costs, and break-even shows the volume needed to cover fixed costs from that gross profit.
Profit Margin Calculator
Calculate profit, margin, and markup from cost and selling price.
Open calculator Pricing & ProfitContribution Margin Calculator
Calculate contribution margin and contribution margin ratio from revenue and variable costs.
Open calculator Pricing & ProfitBreak-Even Calculator
Estimate the units and revenue needed to cover fixed costs.
Open calculator