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Gross Profit Calculator

Calculate gross profit and gross profit margin from revenue and COGS.

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Revenue

Cost of Goods Sold

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Formula

Gross Profit = Revenue - COGS

Subtract the Cost of Goods Sold from total Revenue. Gross Margin % = (Gross Profit / Revenue) × 100.

Worked Example

Revenue: $200,000, COGS: $120,000 Step 1: Gross Profit = 200,000 - 120,000 = $80,000 Step 2: Margin = 80,000 / 200,000 = 0.40 Step 3: 0.40 × 100 = 40% Result: $80,000 gross profit (40% margin)

What Is Gross Profit?

Gross profit is the revenue remaining after subtracting the direct costs of producing goods or delivering services (cost of goods sold, or COGS). It measures how efficiently a business turns raw materials and labor into revenue before accounting for overhead, marketing, and administrative expenses.

Gross Profit = Revenue - Cost of Goods Sold (COGS)
Gross Profit Margin = (Gross Profit / Revenue) x 100
Software companies often have 80-90% gross margins; retail typically 25-50%
COGS includes raw materials, direct labor, and manufacturing overhead, but not rent or marketing

Gross profit is a key indicator of production efficiency. Declining gross margins may signal rising input costs, pricing pressure, or the need to renegotiate supplier contracts.

You can also calculate changes using our Net Profit Calculator, Profit Margin Calculator or Revenue Growth Calculator.

Frequently Asked Questions

What is COGS?

Cost of Goods Sold.the direct costs attributable to producing the goods sold (materials, labor, manufacturing).

What is a good gross margin?

Software: 70-80%. Retail: 25-50%. Manufacturing: 25-35%. Services: 50-70%.

Gross profit vs net profit?

Gross profit excludes operating expenses, taxes, and interest. Net profit is what remains after all expenses.

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Net Profit Calculator Profit Margin Calculator Revenue Growth Calculator

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