💵 Gross Profit Calculator
Calculate gross profit and gross margin percentage from revenue and cost of goods sold (COGS). See how your pricing and COGS affect profitability.
Gross Profit vs Gross Margin — What's the Difference?
Gross Profit is an absolute dollar figure: Revenue − COGS = Gross Profit. Gross Margin is gross profit expressed as a percentage of revenue: (Gross Profit ÷ Revenue) × 100. A company with $1M revenue and $600K COGS has $400K gross profit and a 40% gross margin. Both figures are needed — gross profit shows scale, gross margin shows efficiency.
What Is Included in COGS?
COGS (Cost of Goods Sold) includes all direct costs tied to producing what you sell: raw materials, direct labor, manufacturing overhead, inbound shipping, and packaging. It does NOT include sales, marketing, R&D, or administrative costs — those are operating expenses (SG&A) and appear below gross profit on the income statement.
People Also Ask
Benchmarks vary widely by industry. Software/SaaS: 70–85%. Retail: 25–50%. Grocery: 20–30%. Manufacturing: 30–50%. Restaurants: 60–70% food cost margin. Compare your margin to industry peers, not a universal standard. Trend matters too — a rising gross margin over time signals improving pricing power or cost efficiency.
Gross profit subtracts only COGS from revenue. Net profit subtracts all expenses — COGS, operating expenses (rent, salaries, marketing, R&D), interest, and taxes. A company can have strong gross profit but negative net profit if operating expenses are too high.
Gross margin is calculated as a percentage of the selling price (Gross Profit ÷ Revenue). Markup is calculated as a percentage of cost (Gross Profit ÷ COGS). A 50% markup equals a 33% gross margin. A 100% markup equals a 50% gross margin. Confusion between these two causes common pricing mistakes.