Gross Profit Calculator
Work out gross profit and gross margin from your revenue and cost of goods sold (COGS). Gross profit is what is left after the direct costs of what you sell.
The gross profit formula
Gross Profit = Revenue − Cost of Goods Sold (COGS)
- Subtract the direct costs of what you sold (COGS) from your revenue to find the gross profit.
- Gross margin turns that into a percentage: Gross Margin = Gross Profit ÷ Revenue × 100.
- Only direct costs are deducted. Overheads such as rent, marketing and admin are subtracted later to reach net profit.
How to use this calculator
- Enter your total revenue for the period.
- Enter your cost of goods sold (COGS) — the direct costs of what you sold.
- Gross profit and gross margin update instantly.
Worked examples
A straightforward gross profit
£10,000 revenue with £6,500 COGS. Gross profit = £10,000 − £6,500 = £3,500. Gross margin = 3,500 ÷ 10,000 × 100 = 35%.
A higher-revenue period
£50,000 revenue with £35,000 COGS. Gross profit = £15,000. Gross margin = 15,000 ÷ 50,000 × 100 = 30%.
Breaking even on gross profit
£8,000 revenue with £8,000 COGS. Gross profit = £0. Gross margin = 0%. Every pound of revenue is consumed by direct costs, so there is nothing left to cover overheads.
A loss-making period
£5,000 revenue with £6,000 COGS. Gross profit = £5,000 − £6,000 = −£1,000. Gross margin = −1,000 ÷ 5,000 × 100 = −20%. A negative result means direct costs alone exceeded revenue.
Comparing two periods
Last month: £20,000 revenue, £14,000 COGS, gross margin 30%. This month: £25,000 revenue, £16,000 COGS, gross profit £9,000, gross margin 36%. Revenue rose, but the margin improvement — not just the revenue — shows the business became more efficient.
Gross profit, net profit and COGS
These figures sit at different points on the profit and loss account. Here is the difference, in plain English.
- Gross profit
- Revenue minus the direct costs of what you sold. It shows whether your core trading is profitable before overheads.
- Net profit
- What remains after overheads, interest and tax are also deducted. Net profit is always lower than gross profit — it is the bottom line.
- COGS
- Cost of goods sold — the direct costs of producing or buying what you sold, such as materials and stock. Overheads like rent and salaries are not part of COGS.