Gross Profit Calculator
Calculate gross profit and gross margin from your revenue and cost of goods sold (COGS).
Gross Profit Formula
Gross Margin (%) = (Gross Profit ÷ Revenue) × 100
Gross profit is the simplest measure of profitability — it only accounts for the direct costs of producing or purchasing what you sell, not overhead, salaries, rent, or other operating expenses.
What Is Included in COGS?
COGS includes direct materials, direct labour, and manufacturing overhead directly tied to production. It excludes selling expenses, administrative costs, interest, and taxes. For a retailer, COGS is the wholesale cost of inventory sold.
Gross Profit vs Net Profit
Gross profit only subtracts COGS. Net profit subtracts all expenses including operating costs, interest, and taxes. Gross profit is always higher than net profit. Use the Net Profit Calculator to factor in all costs.
Common Questions
What is a good gross margin?
Software: 70–90%. Retail: 30–50%. Manufacturing: 25–40%. Restaurants: 60–70% (before labour). Gross margin alone doesn't tell you if a business is profitable — you also need to cover operating costs.
Why does gross margin matter for investors?
Gross margin shows how efficiently a company converts revenue into profit before overhead. High, consistent gross margins suggest pricing power and competitive advantage. It's one of the first metrics investors examine.