Gross Profit Calculator
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Gross profit is revenue minus the direct costs of producing goods or services (COGS). It represents the efficiency of production and pricing strategy. Gross profit margin = (Revenue − COGS) / Revenue × 100%.
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Tip: Track gross margin trend over time, not just the absolute number. A declining gross margin often signals pricing pressure or rising input costs before they become a crisis.
- 1Identify total revenue for the period
- 2Calculate COGS: direct materials, direct labour, and direct overheads
- 3Gross profit = Revenue − COGS
- 4Gross margin % = Gross profit / Revenue × 100
Revenue £500k · COGS £300k=£200k gross profit (40% margin)Typical for mid-market retail
| Industry | Typical gross margin |
|---|---|
| Software (SaaS) | 70–85% |
| Professional services | 50–70% |
| Retail (general) | 30–45% |
| Manufacturing | 25–40% |
| Grocery | 20–30% |
| Construction | 15–25% |
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Fun Fact
Apple's gross margin on iPhone is estimated at 50–55%, significantly higher than most hardware companies. This is driven by premium pricing and tightly controlled manufacturing.
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