SellersCalc

Pricing math

Gross Profit Calculator

What is left after the products pay for themselves — the dollars that fund everything else in the business.

Gross profit = revenue − cost of goods sold. A store doing $20,000 of monthly revenue with $12,000 of COGS earns $8,000 of gross profit — a 40% gross margin. Gross profit is the budget for everything that is not the product: advertising, software, salaries, and whatever remains as net profit. If gross profit is thin, no amount of expense discipline downstream can fix the business, which is why it is the first line investors and lenders read. Enter revenue and COGS to get both the dollars and the percentage.

Gross Profit Calculator — your numbers

Gross profit

$8,000.00

Gross margin

40.0%

Estimate only. Results reflect exactly the numbers you enter — verify against your own accounting before making pricing decisions.

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Worked examples

Typical DTC month

Revenue $20,000.00
Cost of goods sold $12,000.00
Gross profit $8,000.00
Gross margin 40.0%

$8,000 of gross profit at 40% — the fund every other bill draws from.

High-margin digital-adjacent store

Revenue $15,000.00
Cost of goods sold $4,500.00
Gross profit $10,500.00
Gross margin 70.0%

A 70% gross margin leaves $10,500 to spend on growth and overhead.

Frequently asked questions

What exactly counts as cost of goods sold?

COGS is every cost directly tied to the products you sold in the period: what you paid for them, inbound freight and duty, packaging, and for manufacturers, direct labor and materials. It excludes selling and operating costs — advertising, payment processing, software, rent, and salaries live below gross profit. The test: would the cost disappear if the sale never happened and the unit stayed unsold?

What is the difference between gross profit and net profit?

Gross profit subtracts only COGS; net profit then subtracts everything else — marketing, fulfillment, payroll, software, rent, interest, and taxes. A store can show a healthy $8,000 gross profit and still lose money if it spends $9,000 on ads and overhead. Gross profit measures whether the products work; net profit measures whether the whole business does.

What is a healthy gross margin for an e-commerce store?

Most sustainable DTC stores run 40–70% gross margin. Below 30%, there is rarely room to buy traffic profitably — a 25% gross margin store spending 20% of revenue on ads keeps almost nothing. Resellers and electronics run structurally thinner and survive on volume and low overhead; private-label and owned-brand products should aim for 50% or better.

Should I measure gross profit monthly or per order?

Both, for different jobs. The monthly figure (this calculator, fed from your books) tracks the health of the whole catalog and catches creeping COGS like rising freight. Per-order gross profit drives tactical decisions: ad bids, free-shipping thresholds, and discount limits. If the monthly margin drifts down while per-order math looks fine, your product mix is shifting toward weaker items.

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Part of the Pricing & Margins collection.