Gross Profit Margin CalculatorFree online financial calculator — instant results, no sign-up
Measure gross profit and gross margin after cost of goods sold.
Estimates only, based on the inputs and assumptions shown. This is not financial, investment, tax, or legal advice. Prices, rates and local rules may change; crypto scenarios do not predict returns. Confirm important decisions with a qualified professional.
Sign in to save results and favorites.
About the Gross Profit Margin Calculator
The Gross Profit Margin Calculator measures how much revenue remains after subtracting cost of goods sold, reporting both gross profit in dollars and gross margin as a percentage of revenue. With the default revenue of $150,000 and cost of goods sold of $90,000, it calculates gross profit of $60,000.00 and a gross margin of 40%. These results show the amount available to cover operating expenses and other costs before arriving at net profit.
- Revenue ($)
- Sales revenue for the period being analyzed, expressed in dollars, with a default value of $150,000.
- Cost of goods sold ($)
- Costs directly attributable to the goods or services sold during the same period, expressed in dollars, with a default value of $90,000.
Formula and method
GP = R − C; GM = (GP / R) × 100 = ((R − C) / R) × 100, for R ≠ 0.
- RRevenue in dollars.
- CCost of goods sold in dollars.
- GPGross profit in dollars.
- GMGross margin expressed as a percentage of revenue.
Subtract cost of goods sold from revenue to obtain gross profit, then divide gross profit by revenue and multiply by 100 to obtain gross margin. Using the default inputs, $150,000 − $90,000 = $60,000.00, and ($60,000 / $150,000) × 100 = 40%.
Worked example
These are the calculator's starting values and the results it actually produces for them.
Inputs
- Revenue150000 $
- Cost of goods sold90000 $
Results
- Gross profit$60,000.00
- Gross margin40%
How to use the Gross Profit Margin Calculator
- 1Choose a reporting period and gather revenue and cost-of-goods-sold figures for that same period.
- 2Enter sales revenue in Revenue ($), or retain the default of 150000.
- 3Enter the corresponding direct costs in Cost of goods sold ($), or retain the default of 90000.
- 4Review the gross profit output: the default inputs produce $60,000.00.
- 5Review the gross margin output: the default inputs produce 40%, the share of revenue remaining after cost of goods sold.
Reading your result
Gross profit shows the dollar amount left after cost of goods sold; the default result of $60,000.00 is not net profit because other expenses have not been deducted. Gross margin expresses that same amount as a share of revenue; the default result of 40% means 40% of sales revenue remains after cost of goods sold. For positive revenue, a negative result means cost of goods sold exceeds revenue, while a zero result means revenue exactly covers cost of goods sold.
Limitations
Both inputs must use the same currency, reporting period, and accounting basis. Use revenue consistently, generally net of returns, allowances, and sales discounts, and classify cost of goods sold according to your accounting practices. The calculator does not deduct operating expenses, interest, or taxes that are outside cost of goods sold, and it does not measure cash flow or net profitability. Gross margin is undefined when revenue is zero; negative revenue can produce percentages that are not useful for ordinary margin analysis. Appropriate margins vary by industry and business model, so the result alone does not establish whether performance is strong.
Common questions
Why is the default gross margin 40% rather than the markup percentage?+
Gross margin divides gross profit by revenue: $60,000 / $150,000 × 100 = 40%. Markup instead divides gross profit by cost of goods sold, so it uses a different denominator and is not the percentage this calculator reports.
Which costs should I include in cost of goods sold?+
Include costs directly attributable to what you sold, such as inventory costs for a retailer or direct materials, direct labor, and allocated production overhead for a manufacturer. Exclude selling and administrative expenses unless your applicable accounting treatment specifically places a cost in cost of goods sold.
Does the default gross profit of $60,000.00 mean the business earned that much net profit?+
No. It is the amount remaining from $150,000 in revenue after $90,000 in cost of goods sold. Expenses outside cost of goods sold must still be deducted to determine net profit.
Can gross profit be calculated when revenue is zero?+
Yes. Subtracting cost of goods sold from zero still gives a dollar gross profit or loss. Gross margin cannot be calculated because its formula requires division by revenue, and division by zero is undefined.
Does the calculator save my information?+
Calculations run in your browser. While signed in, inputs and results are automatically recorded in account history; saving a result creates a separate saved record.
You might also like
Microloan Financing Calculator
Calculate amortizing microloan payments and total cost including an upfront fee.
Invoice Factoring Cost Calculator
Calculate a flat factoring fee, initial advance and reserve release on invoice collection.
Merchant Cash Advance Cost Calculator
Calculate a factor-rate advance's total repayment and equal daily remittance.
Equipment Financing Calculator
Estimate fixed payments for equipment purchased with a down payment.
Fleet Lease Versus Buy Cost Calculator
Compare undiscounted fleet lease costs with cash purchase costs net of resale value.
Business Credit Line Interest Calculator
Estimate interest and an unused-line fee from constant average balances.
Results are estimates for informational purposes and are not financial, medical or legal advice.