Gross Profit Calculator
Calculate gross profit and gross margin from revenue and cost of goods sold (COGS).
About the Gross Profit Calculator
Gross profit strips revenue down to what is left after only the direct cost of producing what you sold — it is the cleanest view of how efficiently a business turns sales into profit before overhead, marketing, and administrative costs are considered. This calculator computes gross profit and the resulting gross margin percentage.
How It Works
The calculator subtracts cost of goods sold (COGS) — the direct cost of the products or services sold — from revenue to get gross profit, then divides gross profit by revenue to express gross margin as a percentage.
Gross Profit = Revenue − COGS; Gross Margin (%) = Gross Profit / Revenue × 100.
Example
Scenario: $200,000 in revenue with $120,000 in cost of goods sold.
Result: Gross profit of $80,000, for a gross margin of 40%.
Assumptions & Limitations
- COGS is assumed to include only direct costs of production, such as materials and direct labor — not overhead, marketing, or administrative expenses.
- Revenue is assumed net of returns and discounts.
- Gross profit does not reflect overall business profitability — operating expenses below the gross profit line still need to be covered.
- Comparing gross margin across companies is only meaningful within the same industry, since cost structures vary widely.