Gross Profit Calculator

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

Gross Profit & Margin

Presets:

Financial Inputs

Instant calculationBefore OPEX & taxes

Primary Metric

Gross Profit

$60,000.00

Your business retains $60,000.00 on $100,000.00 of total revenue.

Gross profit margin60.00%

Cost of goods sold (COGS)$40,000.00

Effective markup on cost150.00%

Formulas & Logic

Transparent mathematical formulas behind this calculation engine.

Gross Profit ($)

Gross Profit = Total Revenue - Cost of Goods Sold (COGS)

Measures the absolute dollars retained to cover operating expenses, debt service, taxes, and net profit.

Gross Margin (%)

Gross Margin = (Gross Profit ÷ Total Revenue) × 100

Reveals the proportion of each revenue dollar retained as gross earnings before indirect overhead.

Effective Markup (%)

Markup = (Gross Profit ÷ COGS) × 100

The percentage markup earned above the direct cost of goods sold.

Worked Example

E-Commerce Store Monthly Gross Profit ($100k Revenue / $40k COGS)

An online brand generates $100,000.00 in monthly sales revenue with direct manufacturing and packaging costs of $40,000.00.

Given

Total Revenue: $100,000.00
Cost of Goods Sold: $40,000.00

Calculated

Gross Profit: $60,000.00
Gross Margin: 60.00%
Effective Markup: 150.00%

Calculation

Gross Profit = $100,000.00 - $40,000.00 = $60,000.00
Gross Margin = ($60,000.00 ÷ $100,000.00) × 100 = 60.00%
Effective Markup = ($60,000.00 ÷ $40,000.00) × 100 = 150.00%

Takeaway: The store retains $60,000.00 (60.00% gross margin) to fund marketing, payroll, and administrative operations.

Methodology & Assumptions

Underlying definitions and operational accounting principles.

Net Revenue: Assumes revenue is net of customer returns, refunds, and promotional allowances.
Direct COGS: Includes only direct production and landed inventory costs, excluding indirect operating expenses (OPEX).

Frequently Asked Questions

Practical answers regarding margins, markups, and pricing strategy.

How do I calculate gross profit?

Gross profit is calculated by subtracting Cost of Goods Sold (COGS) from Total Revenue: Gross Profit = Revenue - COGS. To find the gross profit margin percentage, divide gross profit by total revenue and multiply by 100: Gross Margin (%) = (Gross Profit ÷ Revenue) × 100.

What is the difference between gross profit and net profit?

Gross profit measures revenue minus direct production costs (COGS). Net profit is the final bottom line after deducting all operational overhead, marketing, salaries, interest, and taxes.

What is a healthy gross profit margin?

Healthy gross margins vary widely: software and SaaS often achieve 75%–85%, retail and ecommerce typically range between 40%–60%, and wholesale or grocery often operates between 15%–25%.