What is gross profit?

Gross profit is the revenue remaining after subtracting the cost of goods sold (COGS). The formula is: Gross Profit = Revenue - COGS. For example, if revenue is $100,000 and COGS is $40,000, gross profit is $60,000.

What is the difference between gross profit and net profit?

Gross profit only subtracts COGS from revenue. Net profit subtracts all expenses including marketing, salaries, rent, software, taxes, and interest. A store might have 60% gross margin but only 15% net margin after operating expenses.

What is a good gross margin for ecommerce?

Good gross margin varies by industry. Beauty & Cosmetics averages 65%, Fashion & Apparel averages 55%, Health & Wellness averages 55%, Home & Garden averages 45%, Food & Beverage averages 40%, and Electronics averages 25%. Above 50% is generally considered healthy for most verticals.

How can I improve my gross margin?

Five key strategies: (1) Negotiate better supplier pricing. (2) Raise selling prices strategically. (3) Optimize shipping and fulfillment costs. (4) Eliminate low-margin products from your catalog. (5) Bundle products to increase perceived value and blended margin.

What is the difference between gross profit and gross margin?

Gross profit is a dollar amount (Revenue - COGS). Gross margin is a percentage ((Gross Profit / Revenue) x 100). For example, $100,000 revenue minus $45,000 COGS equals $55,000 gross profit and 55% gross margin. Margin is more useful for comparing performance over time and against competitors.

Gross Profit Calculator

Calculate gross profit and margin from your revenue and COGS. See if you're above or below the industry average for your vertical.