How is Gross Profit calculated?

Gross Profit is calculated by subtracting the Cost of Goods Sold (COGS) from Total Revenue.

What is the difference between Gross Margin and Net Margin?

Gross margin only deducts direct production costs (COGS). Net margin deducts all costs, including operating expenses, taxes, and interest, to show the final bottom-line profitability.

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Gross Margin Calculator | Profitability & COGS Engine

📈 Product Profitability Engine

Total Revenue / Selling Price

Cost of Goods Sold (COGS)

⚙️ Advanced: Direct Labor & Shipping ▼

Direct Labor Costs

Direct Shipping / Materials

Total Base COGS

Markup Percentage

Gross Margin %

Absolute Gross Profit

Revenue Split

Total COGS

Gross Profit

Revenue vs COGS

Rev

COGS

Profit

Financial Metric	Amount	% of Rev
Total Sales Revenue	$0	100.0%
Total Cost of Goods Sold	-$0	0.0%
Gross Profit	$0	0.0%

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Analyzing your gross margins…

About the Gross Margin Engine

Gross Margin represents the percentage of total sales revenue that a company retains after incurring the direct costs associated with producing the goods and services it sells (COGS). The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations.

Margin vs Markup: While often confused, they are vastly different. Margin is profit based on the selling price, while markup is profit based on the cost. A 50% markup on a $100 product means you sell it for $150. Your profit is $50, which equates to a 33.3% Gross Margin ($50 / $150).

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📊 Gross Margin Calculator

About the Gross Margin Engine