How to calculate gross profit

To calculate gross profit, take your total sales and subtract the cost of making or selling your product.

Total sales - cost of goods sold = gross profit

Let’s say your business sells $12,000 worth of your product, and it cost you $8,000 to make those products. This would leave a gross profit of $4,000.

$12,000 total sales - $8,000 cost of making the product = $4,000 gross profit

 

Related terms:
What is gross profit?
What is a profit and loss statement?
How to calculate net profit margin

Related Xero feature:
Know how your business is performing with the business dashboard

Related Small Business Guide:
How to manage your finances and cash flow

Accounting Terms

Accounting terms and how-tos for beginners. Let us walk you through all the basics that you need know.

How to calculate gross profit

To calculate gross profit, take your total sales and subtract the cost of making or selling your product.

Total sales - cost of goods sold = gross profit

Let’s say your business sells $12,000 worth of your product, and it cost you $8,000 to make those products. This would leave a gross profit of $4,000.

$12,000 total sales - $8,000 cost of making the product = $4,000 gross profit

 

Related terms:
What is gross profit?
What is a profit and loss statement?
How to calculate net profit margin

Related Xero feature:
Know how your business is performing with the business dashboard

Related Small Business Guide:
How to manage your finances and cash flow

Showing 36 more questions for all topics