Gross Profit Calculator

A gross profit calculator, or a markup calculator, will take your sales and cost of goods sold, and returns your gross profits. Gross profit indicate the profit generated by your business through manufacturing, purchasing and selling goods.

If you would like to calculate your Gross Profit, and Gross Profit Margin, please enter the details of your sales below and press Calculate button


Gross Profit: $1.50

Gross Profit Margin: $0.50


Cost of Sales: $1.50

Gross Profit: $0.50

Are You Using A Gross Profit Calculator To Understand Your Margins?

After you’ve been doing business for a while, you’ll want to know how profitable it is. Do you need to re-structure the pricing? Do you need to come up with a better business idea? What your customers are saying is important, but not enough to answer these questions.

You’ll need to figure out the profitability of your business in terms of hard cash flow.

That’s where a simple tool called the Gross Profit Calculator comes in, that’s usually free to use. Gross profit is usually presented as a percentage or ratio. We’ll take a look at the importance of knowing how to calculate your Gross Profit, with or without a calculator. And we’ll also look at a practical example as reference.

First you must ask yourself a crucial question.

Is Your Business Making Money?

As a new business owner, you’ll need to know your gross profit to tell whether or not your business is making money. You should be going through your income statement to figure out your business’s profits and losses.

All businesses need to earn a profit. When you understand it, and are able to calculate profit margins, you can look at percentage value instead of pounds. When you factor in all your costs into your profit margin, you can ensure your business stays in the green.

What Is A Gross Profit Calculator?

A gross profit calculator, or a markup calculator, will take your sales and cost of goods sold, and returns out your gross profits. The gross profit is the difference between the two. It indicates the profit generated by your business through manufacturing, purchasing and selling goods.

If you were to calculate this yourself, you’d need to know the following simple formula:

Gross profit = sales/total revenues – (cost of goods sold)

In other words,

Gross profit = total revenues – (purchase + direct expenses)

The Gross Profit won’t include things like GST and other taxes, which are generally passed on to the customer.

What it will include is things like the cost for, among other things:

  • Manufacturing parts or raw materials
  • Labour for production
  • Shipping
  • Equipment used in production
  • Time spent with a client
  • Production facility utilities

A profit calculator makes calculations just a bit quicker and saves you time to carry on with other important aspects of your business.

Profit Calculator

How To Calculate Gross Profit Margins In Excel

Gross Profit Margin

From the gross profit, you can calculate the gross profit margins with the following formula: Gross profit margin or gross profit percentage = (Revenue – cost of goods sold) / Revenue X 100

If you’re using Excel for your calculations, you can:

  • Put the net sales values in column A1
  • Put the cost of goods sold into column B1
  • Calculate gross profit by typing the formula into C1: (A1-B1)/A1. Press enter.
  • If you want to see this as a percentage, it is best not to multiply by 100. You can keep using the values in C1 elsewhere on your spreadsheets if you simply use formatting options to change between decimal and percent.

Using the values for gross profit margin, you can further calculate Net profit margin includes taxes and other costs that aren’t associated with the cost of goods and services.

An Illustrative Example

Let’s take a look at a simple example of Gross Profit and how it can be used to a business’s benefit.
Suppose a store buys a shirt for £40 and sells it for £100 in-store, no packing and shipping involved.
Consider the costs for the retailer. These include the costs of running the store, such as

  • rent,
  • overhead and
  • labour.

Consider the operating cost to be around £28. So a £100 purchase, minus the £40 cost of the goods, minus the £28 operating costs associated with the piece of garment leaves a profit margin of 32 percent.
If you consider another model of retail, the buy online and store-pickup model, then you’ll see through a comparison of the profit margins which model is more profitable.

For the same outfit that cost the retailer £40 to buy, there will be additional operating costs of operating both channels. Suppose it costs £9 extra to keep the ‘buy online pickup in store’ channel open. Then the total operating costs come to £37. The profit margin that’s left behind is 23 percent.
Clearly, from this illustration, you can see that running a brick and mortar store is more profitable in the example. Such illustrations can help business leaders make better decisions about the future of their business.

How To Use A GP Calculator As A Trader Or Business Owner

The GP calculator can be a very useful tool in the arsenal of the business owner or trader. It indicates how efficiently the business is using their resources to produce products or deliver services. A better understanding will offer the following benefits:

  • If you manage your profit margins better, you can grow your business.
  • Understanding your profit margins is especially going to serve you during volatile times. It lets you adapt quickly, take about turns if you have to.
  • With your profit margins on tap, you can make decisions faster and be a more proactive leader. For instance, if there is a spike in profit margins, it may suggest there’s a new scope for investment. A fall in profit margins may indicate rising expenses, where you’ll need to look at your costs and cut back where necessary.
  • If your business has a number of products or projects, reporting the gross profits on each separately can help you ensure that the components of your profit margin are performing as they should.

The Bottomline

Now that you can calculate your gross profit using a GP Calculator and profit margins using Excel, you may wonder how your gross profit compares. For that, you’d need to look at the average margins for your industry. In retail, for instance, the typical profit margin is around 53%. Other industries have other average numbers.

Whatever your industry, profit margin calculators can help to make or break your business. Understanding how gross profit margins are affected by different business models is crucial to taking your business towards growth.

Disclaimer: These calculations are only for illustrative purposes and are not a substitute for professional advice. If you would like to know how gross profit margin can impact your numbers, you should speak to an certified financial advisor.