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
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Enter revenue and cost of goods sold.
Gross profit margin
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Gross profit as a percentage of revenue.
Revenue
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Total revenue for the period.
Cost of goods sold
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Direct costs for the same period.
Results are estimates based on the values entered and are provided for general planning.
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Step by step
How to use the gross profit
- Enter Revenue for the accounting period.
- Enter the Cost of goods sold for the same period.
- Read the gross profit in dollars and the gross profit margin.
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 represents the direct costs you choose to treat as cost of goods sold for this calculation.
- 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 dollars vs gross margin percentage
Gross profit is a dollar amount: revenue minus COGS. Gross margin expresses it as a share of revenue. $18,000 of gross profit on $50,000 of revenue is a 36.00% margin; the same $18,000 on $90,000 of revenue is only 20.00%. Dollars show what is available to cover other costs; the percentage lets you compare periods of different size.
Worked examples
Positive: revenue $50,000, COGS $32,000. Gross profit = $18,000. Gross margin = $18,000 ÷ $50,000 × 100 = 36.00%.
Negative: revenue $10,000, COGS $12,500. Gross profit = −$2,500. Gross margin = −$2,500 ÷ $10,000 × 100 = −25.00%. The calculator reports this as a valid result: the direct costs entered exceed revenue for the period.
Zero revenue: with $0 revenue and $1,200 COGS, gross profit is −$1,200 and gross margin shows N/A, because margin divides by revenue.
Gross profit vs profit margin and contribution margin
The Profit Margin Calculator works on one item — its price and cost — and adds markup. This calculator works on period totals. The Contribution Margin Calculator subtracts all variable costs, which can include items such as sales commissions or shipping that sit outside COGS, so it is the figure used for break-even analysis.
Gross profit versus net profit
Gross profit stops at the costs entered as COGS. Operating profit also subtracts operating expenses such as rent, salaries, and marketing; net profit goes further through interest, depreciation, and tax. A period can show positive 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
Which calculator do you need?
- Want gross profit expressed as a percentage of revenue? Use the Profit Margin Calculator.
- Need the contribution each unit makes toward fixed costs? Try the Contribution Margin Calculator.
- Want the sales volume where gross profit covers fixed costs? Use the Break-Even Calculator.
- Want the dollar-versus-percentage distinction explained? Read Gross Profit vs Gross Margin.
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
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