Gross Profit Calculator

The gross profit calculator helps you see how much money is left over from your sales once you have paid for the goods or services you sold. It takes two figures, your total revenue and your cost of goods sold (COGS), and returns both the gross profit in dollars and the gross margin as a percentage. Gross profit is simply revenue minus COGS, while gross margin expresses that profit as a share of revenue, so you can compare performance across periods or against other businesses no matter their size. Small business owners, retailers, manufacturers, cafe operators and freelancers all use this measure to check whether their pricing and supplier costs are leaving enough headroom to cover overheads such as rent, wages, marketing and tax. A healthy gross margin means there is room to invest and grow, while a thin one is a warning that costs are too high or prices too low. To get the most from this tool, make sure your COGS includes only the direct costs of producing or buying what you sold, such as materials, freight inwards and direct labour, and leave out fixed overheads, which belong further down the profit and loss statement. Track your gross margin every month rather than once a year so you spot drift early, and compare it against industry benchmarks for your sector here in New Zealand. If your margin is slipping, look at supplier pricing, waste, discounting and product mix before you assume you simply need to sell more. Used regularly, gross profit and margin give you a clear, fast read on the core profitability of what you sell.

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$180,000
Gross profit
Gross margin36.0%

Gross profit = revenue - COGS. Gross margin = gross profit / revenue. Estimate only, not financial or tax advice.

How it works

Gross profit is your revenue minus the cost of goods sold. Gross margin is that gross profit divided by revenue, shown as a percentage. With revenue of 500,000 and COGS of 320,000 the gross profit is 180,000.

Worked example

With revenue of $500,000 and cost of goods sold of $320,000, gross profit is 500,000 minus 320,000, which is $180,000. The gross margin is 180,000 divided by 500,000, which is 36.0 percent.

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Frequently asked questions

What is the difference between gross profit and net profit?

Gross profit is revenue minus the direct cost of goods sold, before overheads. Net profit goes further and subtracts all other expenses such as rent, wages, interest and tax. Gross profit shows the core profitability of your sales, while net profit shows what you actually keep.

What should I include in cost of goods sold?

Include only the direct costs of producing or buying what you sold, such as materials, stock purchases, freight inwards and direct labour. Leave out fixed overheads like rent, admin salaries and marketing. Those are deducted later when you work out net profit.

Is GST included in these figures?

You should use GST exclusive figures for both revenue and COGS so the margin is not distorted. Most businesses report profit on a GST exclusive basis. Be consistent so the percentage is meaningful.