Calculate gross profit and gross margin from revenue and cost of goods sold with multi-product analysis and trend comparison.
Revenue can rise while the economics of what was sold deteriorate. Gross Profit Calculator separates that question into two results: gross profit, found by subtracting cost of goods sold from revenue, and gross margin, which expresses that profit as a percentage of revenue. It can also compare product lines and periods to reveal differences in margin. The frequent mistake is entering every business expense as cost of goods sold. Rent, marketing, interest, and similar operating costs generally belong outside this calculation.
A concrete input and expected output from the current implementation.
Input
Revenue: 1000 Cost of goods sold: 600
Expected output
Gross profit: 400 Gross margin: 40%
Gross profit is 1000 - 600 = 400. Dividing 400 by revenue of 1000 gives 0.40, or 40%.
For each entry, the calculator subtracts cost of goods sold from revenue. It then divides that gross profit by revenue and converts the result to a percentage. A loss at the gross level produces a negative gross profit and negative margin. The percentage describes how much revenue remains after the entered cost of goods sold, before other expenses.
Multi-product analysis applies the same calculation to each product and to the combined figures. The combined margin comes from total gross profit divided by total revenue, so products with more revenue have more influence. Trend comparison places results from different periods alongside one another, making changes in revenue, cost, gross profit, and margin easier to distinguish.
Usually no. Enter costs attributable to producing or acquiring the goods or services represented by the revenue, using the accounting classification appropriate to the business. General administrative, selling, financing, and tax expenses are normally outside gross profit. This calculator does not decide whether a particular expense qualifies, so uncertain classifications should be checked with an accountant.
The combined percentage is based on the summed revenue and summed gross profit, not a simple average of the individual percentages. A high-revenue product therefore affects the total more than a low-revenue product. A simple average is correct only in special cases, such as when every included product has the same revenue.
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