Gross Profit Calculator
Gross profit, gross margin and markup from a period’s revenue and cost of goods sold, then net profit and the revenue needed to cover overheads.
Result
Gross profit: $192,000.00
Gross margin before overheads, interest and tax. No industry margin is given.
- Gross margin
- 40%
- Markup on cost
- 66.67%
https://calcgallery.com/business-investing/gross-profit-calculator/
Results are arithmetic estimates based on the assumptions you enter, not accounting, tax, investment or lending advice. Forecasts can be wrong and important decisions should be checked with a qualified adviser. Read the full disclaimer
How to use the Gross Profit Calculator
- Enter revenue for the period, and the cost of goods sold for the same period.
- Optionally enter operating expenses such as rent, salaries and marketing, to carry on to net profit.
- Read gross profit, gross margin and markup, then net profit and the revenue needed to cover overheads.
The formulas
gross profit = revenue − cost of goods soldgross margin = gross profit ÷ revenuemarkup = gross profit ÷ cost of goods soldnet profit = gross profit − operating expensesbreak-even = operating expenses ÷ gross marginNet profit here is before interest and tax. Losses show as negative figures: selling for 100 what cost 120 is a −20% margin and a −16.67% markup.
Gross profit versus unit margin
The margin and markup calculator works on one item’s cost and price. This page works on a whole period’s totals, which is how a set of accounts reports them, and carries on to overheads and net profit. On the same numbers the two give the same margin and markup.
What the diagram shows
Revenue as one bar: the part that goes on cost of goods sold, the part that goes on operating expenses, and what is left as profit.
With your numbers
- Gross profit = $480,000.00 − $288,000.00 = $192,000.00
- Gross margin = $192,000.00 ÷ $480,000.00 = 40%
- Markup = $192,000.00 ÷ $288,000.00 = 66.67%
- Net profit = $192,000.00 − $120,000.00 = $72,000.00
Quick reference
Gross margin before overheads, interest and tax. No industry margin is given.
| Example | Gross profit |
|---|---|
| 480,000 revenue, 288,000 COGS | $192,000.00 |
| 100 revenue, 50 cost | $50.00 |
| 150 revenue, 100 cost | $50.00 |
| Selling at cost | $0.00 |
| Selling below cost | -$20.00 |
| 1.2 million revenue, 65% margin | $780,000.00 |
Common questions about the Gross Profit Calculator
- What is the difference between margin and markup?
- Both divide the same gross profit, by different things. Margin divides by revenue, markup by cost. 192,000 of gross profit on 480,000 of revenue and 288,000 of cost is a 40% margin and a 66.67% markup. A 50% markup is only a 33.33% margin, which is why mixing them up leads to underpricing.
- What belongs in cost of goods sold?
- Costs that rise with each sale: the stock or materials, direct labour to make or deliver it, and freight in. Rent, office salaries and marketing are operating expenses, because they do not change with each sale. Where the line falls varies by business, so keep it the same from period to period.
- How is break-even revenue worked out here?
- Each sale keeps its gross margin toward overheads. At a 40% margin, 120,000 of operating expenses needs 300,000 of revenue to be covered. Below that the business loses money even though every sale is profitable on its own.
- What is a good gross margin?
- This page does not give one. Software, restaurants, retailers and builders run on very different margins. Compare your margin with your own past periods, and with what your overheads need.