Ready to calculate
Enter your sales and cost details below. The calculator will display gross profit, margin, markup, unit economics, target margin guidance, and a Plotly chart.
Calculator form
Three columns on large screens, two on medium, one on mobile.
Example data table
| Scenario | Gross Sales | Discounts | Returns | Net Sales | COGS | Gross Profit | Gross Margin |
|---|---|---|---|---|---|---|---|
| Inventory Formula Example | $125,000.00 | $3,500.00 | $1,500.00 | $120,000.00 | $80,000.00 | $40,000.00 | 33.33% |
| Direct COGS Example | $96,000.00 | $2,000.00 | $1,000.00 | $93,000.00 | $58,000.00 | $35,000.00 | 37.63% |
Formula used
Gross Sales = Manual Gross Sales, or Units Sold × Selling Price Per Unit
Net Sales = Gross Sales − Discounts − Returns & Allowances
Inventory COGS = Beginning Inventory + Purchases + Freight-In + Direct Labor + Manufacturing Overhead − Ending Inventory
Gross Profit = Net Sales − COGS
Gross Margin % = (Gross Profit ÷ Net Sales) × 100
Markup % = (Gross Profit ÷ COGS) × 100
Inventory Turnover = COGS ÷ Average Inventory
How to use this calculator
- Select a currency symbol and choose the COGS method.
- Enter gross sales manually, or provide units sold and selling price.
- Add discounts and returns to convert gross sales into net sales.
- For inventory mode, enter beginning inventory, purchases, freight-in, labor, overhead, and ending inventory.
- For direct mode, enter one total COGS figure instead.
- Optionally enter a target gross margin to see required sales and target selling price per unit.
- Click the calculate button to show results above the form, review the chart, and export CSV or PDF reports.
FAQs
1. What does gross profit measure?
Gross profit measures how much money remains after subtracting cost of goods sold from net sales. It focuses on product-level profitability before operating expenses, taxes, and financing costs.
2. What is the difference between margin and markup?
Gross margin compares gross profit to net sales. Markup compares gross profit to cost of goods sold. They are related, but they answer different pricing and profitability questions.
3. Should discounts and returns be included?
Yes. Discounts and returns reduce gross sales and create net sales. Ignoring them can overstate gross profit, margin, and unit economics, especially in discount-heavy businesses.
4. When should I use the inventory formula?
Use the inventory formula when you track inventory movements and want COGS built from beginning stock, purchases, freight-in, labor, overhead, and ending inventory.
5. When should I use direct COGS entry?
Use direct COGS entry when you already know total product cost for the period. It is helpful for quick reviews, simple businesses, or imported accounting reports.
6. Can gross profit be negative?
Yes. A negative result means your net sales are lower than cost of goods sold. That often signals underpricing, excessive discounts, high returns, or rising input costs.
7. Why does inventory turnover matter here?
Inventory turnover shows how efficiently inventory becomes cost of sales. Low turnover may tie up cash, while higher turnover can support healthier inventory planning and purchasing decisions.
8. Is gross profit the same as net profit?
No. Gross profit stops after cost of goods sold. Net profit also subtracts operating expenses, interest, taxes, depreciation, and other non-product costs.