# Gross Profit Calculator

Calculate gross profit and gross profit margin. Revenue minus COGS shows how much money remains to cover operating expenses and generate net profit.

## What this calculates

Calculate your gross profit and gross profit margin in seconds. Enter your total revenue and cost of goods sold to see how much money is left after direct production costs, before operating expenses like rent, marketing, and salaries.

## Inputs

- **Revenue (Total Sales)** ($) — min 0 — Total sales revenue for the period.
- **Cost of Goods Sold (COGS)** ($) — min 0 — Direct costs to produce or purchase the goods sold (materials, labor, manufacturing).

## Outputs

- **Gross Profit** — formatted as currency — Revenue minus cost of goods sold.
- **Gross Profit Margin** — formatted as percentage — Gross profit as a percentage of revenue.
- **Cost Ratio** — formatted as percentage — COGS as a percentage of revenue.

## Details

Gross profit = revenue - cost of goods sold. If your business brings in $500,000 in revenue and spends $300,000 on COGS, your gross profit is $200,000 and your gross profit margin is 40%. That means you keep 40 cents from every dollar of sales before overhead costs.

Gross profit margin varies dramatically by industry. Software companies often enjoy margins of 70-85% because digital products have near-zero marginal cost. Grocery stores operate on thin margins of 25-30%, while restaurants typically sit around 60-65%. Manufacturing margins usually fall between 30-50% depending on the product complexity.

Gross profit is not the same as net profit. Gross profit only subtracts direct production costs (materials, direct labor, manufacturing overhead). You still need to subtract operating expenses (rent, salaries, marketing, insurance), interest, and taxes to get net profit. A healthy gross margin gives the business room to cover those expenses and still turn a profit on the bottom line.

## Frequently Asked Questions

**Q: What is the difference between gross profit and net profit?**

A: Gross profit is revenue minus the direct cost of producing goods (COGS). Net profit subtracts all expenses: COGS plus operating expenses, interest, and taxes. A company can have a strong gross profit but a weak net profit if operating expenses are high. Gross profit shows production efficiency, while net profit shows overall profitability.

**Q: What is included in cost of goods sold (COGS)?**

A: COGS includes all direct costs to produce or purchase the products you sell. For a manufacturer, that is raw materials, direct labor, and factory overhead. For a retailer, it is the wholesale cost of inventory. COGS does not include indirect expenses like rent, marketing, or administrative salaries. Those are operating expenses subtracted below the gross profit line.

**Q: What is a good gross profit margin?**

A: It depends on the industry. Software and tech companies often have 70-85% gross margins. Service businesses range from 50-75%. Retail and wholesale are typically 25-50%. Manufacturing sits around 30-50%. The key is to compare your margin against direct competitors. If your gross margin is significantly below the industry average, look at pricing strategy or production costs.

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Source: https://vastcalc.com/calculators/finance/gross-profit
Category: Finance
Last updated: 2026-04-08