Profit Calculator
Calculate gross profit, product cost and markup percentage from revenue and gross margin.
Profit Formula Reference Table
Profit formulas are used to find gross profit, cost or markup when two of the three values are known.
| What to Find | Formula | Example |
|---|---|---|
| Gross Profit (P) | P = Revenue x Gross Margin % | $500 x 40% = $200 |
| Cost (C) | C = Revenue minus Profit | $500 minus $200 = $300 |
| Markup % | Markup = Profit / Cost | $200 / $300 = 66.67% |
| Revenue (R) | R = Profit / Gross Margin % | $200 / 40% = $500 |
| Gross Margin % | G = Profit / Revenue | $200 / $500 = 40% |
How the Profit Calculator Works
The profit calculator uses your revenue and gross margin percentage to instantly compute your gross profit, cost of goods and markup percentage. These three outputs give you a complete picture of product economics without needing a spreadsheet.
Revenue and Gross Margin Inputs
Revenue means the selling price of your product or service before any deductions. Gross margin is the percentage of revenue that remains as profit after covering the cost of production or acquisition.
Gross Profit Formula
Gross profit equals revenue multiplied by the gross margin percentage. If revenue is $500 and gross margin is 40%, gross profit is $200. The remaining $300 is the cost of goods sold.
Markup vs Gross Margin
Markup percentage and gross margin percentage are related but different. Gross margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. For the same product, markup is always a higher number than gross margin.
When to Use a Profit Calculator
A profit calculator is useful when pricing new products, reviewing existing margins or building a sales budget. Retailers, wholesalers and e-commerce sellers use profit calculations daily to ensure every product sold contributes positively to the business bottom line.
Retail Pricing and Margin Planning
Retail pricing starts with knowing your cost and the margin your business needs to cover overheads and generate a net profit. By entering your target gross margin, this calculator tells you instantly what gross profit each sale generates and whether your pricing is viable.
Understanding Markup for Purchasing
Purchasing managers use markup to verify supplier negotiations. If a supplier offers goods at a certain price, entering the selling price and margin shows whether the markup is sufficient to cover freight, storage and other variable costs above the cost of goods.
Frequently Asked Questions
Gross profit equals revenue multiplied by the gross margin percentage. For example, if your revenue is $500 and your gross margin is 40%, your gross profit is $200.
Profit is the dollar amount earned after subtracting costs from revenue. Profit margin is the percentage of revenue that becomes profit. A $50 profit on $200 revenue equals a 25% profit margin.
Markup percentage equals gross profit divided by cost. If gross profit is $100 and cost is $150, markup is 66.67%. Markup is always higher than gross margin for the same product.
A good gross margin depends on industry. Retail typically targets 20 to 50%. Software companies often exceed 70%. Service businesses commonly run 50 to 80% gross margins.
Cost equals revenue multiplied by (1 minus gross margin). With $500 revenue and a 40% gross margin, cost is $500 x 0.60 which equals $300.