Gross Profit Calculator
Calculate gross profit and gross profit margin for your business. Free calculator for small business owners, founders, and finance teams.
Gross Profit Calculator
Calculate gross profit and gross profit margin for your business. Free calculator for small business owners, founders, and finance teams.
Generated: 2/22/2026, 12:35:19 AM | AskSMB.io
Calculate Gross Profit
Input Values
Total sales revenue
Direct costs to produce goods or services
Results
Revenue cannot be zero
Gross Profit
$0
Revenue minus COGS
Gross Profit Margin
0%
Profitability as a percentage
Profitability Indicator
N/A
🔴 Low: < 30%
🟡 Average: 30% - 60%
🟢 Strong: > 60%
Profit Breakdown
Revenue Breakdown
How the Gross Profit Calculator Works
What is gross profit?
Gross profit is the profit remaining after subtracting the cost of goods sold (COGS) from total revenue. It represents the amount of money your business retains after covering direct production or acquisition costs, before accounting for operating expenses, taxes, and interest. Gross profit is a fundamental indicator of your business's production efficiency and pricing effectiveness. It shows whether you're charging enough for your products or services relative to what they cost to produce or acquire.
Gross profit vs net profit
Gross profit only considers direct production costs (COGS) and is calculated as Revenue - COGS. Net profit is the final bottom line after all expenses, including operating expenses, interest, taxes, and depreciation. Gross profit shows how efficiently you produce or acquire products. Net profit shows overall business profitability. You can have strong gross profit but low net profit if operating expenses are too high. Both metrics are essential: gross profit for production and pricing decisions, net profit for overall business health assessment.
Why gross profit matters
Gross profit is critical for several reasons: it reveals pricing effectiveness and whether you're charging enough for your products; it shows production efficiency and cost control; it helps you compare profitability across different products or services; it indicates whether you have enough margin to cover operating expenses and generate net profit; and it provides early warning signs of margin erosion from rising costs or pricing pressure. Investors and lenders use gross profit margin to assess business viability and compare companies within the same industry.
What is a good gross margin?
A "good" gross margin varies significantly by industry:
- Software/SaaS: 70-90% (low direct costs, highly scalable)
- Retail: 30-50% (competitive markets, lower margins)
- Manufacturing: 25-40% (higher production costs)
- Restaurants: 60-70% (food costs only)
- Professional Services: 50-70% (primarily labor)
- E-commerce: 40-60% (varies by product type)
Focus on improving your margin over time while remaining competitive in your specific industry. Higher margins provide more cushion for operating expenses and profit.
How to improve gross profit
- Increase prices strategically without losing customers
- Reduce COGS by negotiating better supplier terms
- Improve production efficiency to lower unit costs
- Eliminate waste and optimize inventory management
- Focus on higher-margin products or services
- Automate production processes to reduce labor costs
- Buy materials in bulk for volume discounts
- Reduce product returns and defects
- Upsell and cross-sell to increase average transaction value
- Regularly review and optimize your product mix
- Implement value-based pricing instead of cost-plus pricing
Example Calculation
Frequently Asked Questions
Related Tools
💡 Quick Tips
- •All calculations happen in your browser - your data is private
- •Results update in real-time as you type
- •Export to PDF or share via link
- •No sign-up required