Gross Profit Calculator
What's Left After the Product Itself Is Paid For
Before rent, salaries, marketing, or a single dollar of overhead gets paid, a business has to cover what it actually cost to produce or acquire what it sold. Gross profit answers that first question: how much revenue survives after the direct cost of goods sold is subtracted. It's the foundation every other profitability measure builds on, and it's usually the fastest way to spot whether a pricing or sourcing problem exists before overhead even enters the picture.
The Formula
The calculator also derives Gross Profit Margin automatically when revenue is nonzero: Gross Profit Margin = (Gross Profit ÷ Revenue) × 100.
A Worked Example
| Item | Amount |
|---|---|
| Revenue | $500,000 |
| Cost of Goods Sold | $300,000 |
| Gross Profit | $200,000 |
| Gross Profit Margin | 40% |
Where This Number Matters
- Pricing decisions — a falling gross profit on stable unit volume usually points to rising input costs or discounting that hasn't been offset by higher prices.
- Supplier negotiations — tracking gross profit before and after a sourcing change shows the real impact of a new supplier contract, independent of overhead changes elsewhere in the business.
- Product-line comparison — calculating gross profit separately for each product line reveals which ones are actually funding the rest of the business.
- Lender and investor review — gross profit trends are often the first line item reviewed when assessing whether a business's core economics are improving or deteriorating.
How to Use This Calculator
- Enter total Revenue for the period.
- Enter Cost of Goods Sold (COGS) for the same period.
- Select Calculate to see Gross Profit in dollars, along with the Gross Profit Margin percentage.
Related Calculations
For a percentage-only view of the same relationship, use the Gross Margin Calculator, or continue down the income statement with the Net Profit Calculator.