Method
How it works
Revenue minus cost of goods sold gives gross profit. Dividing gross profit by revenue expresses gross margin, while cost ratio shows the share of revenue consumed by COGS.
Markup uses COGS as its base, which is why it differs from margin. Operating expenses, tax and financing costs are outside this gross-profit calculation.
Common questions
Frequently asked questions
Is gross profit the same as net profit?
No. Gross profit deducts cost of goods sold only; net profit normally includes additional operating and other expenses.
Why are gross margin and markup different?
Gross margin divides profit by revenue, while markup divides profit by cost.
What happens when cost of goods sold is zero?
Gross profit equals revenue, while a markup percentage cannot be meaningfully calculated from a zero cost base.
Not financial advice. This calculator is for general informational purposes only. Check figures independently before making financial decisions.