What this calculator does
This profit calculator takes total revenue and subtracts the costs behind it, cost of goods sold and any other running costs, to give a single dollar figure: how much was actually made. It answers the plain question "how to work out profit" without first converting anything into a percentage.
Percentage tools such as a margin or markup calculator are useful for comparing pricing across products of different sizes, but they hide the actual dollar amount left over. This calculator does the opposite: it starts from real revenue and real costs and returns the profit calculation in dollars first, with the margin shown alongside as a secondary figure.
The formula
Add cost of goods sold to other costs and expenses to get total costs, then subtract that from revenue. What is left over is profit. Profit margin is that profit expressed as a percentage of revenue, so two businesses with very different revenue can still be compared on the same basis.
| Term | Meaning |
|---|---|
| Profit | Revenue minus total costs: what is left over after everything has been paid for. |
| Cost of goods sold | The direct cost of producing or buying what was sold: materials, stock, direct labour. |
| Other costs and expenses | Everything else that had to be paid to generate that revenue: rent, wages not tied directly to production, marketing, fees. |
| Profit margin | Profit as a percentage of revenue: profit ÷ revenue × 100. |
The inputs explained
| Field | What to enter |
|---|---|
| Total revenue ($) | Total revenue or sales for the period being measured. |
| Cost of goods sold ($) | The direct cost of the goods or services sold, before any other overheads. |
| Other costs and expenses ($) | Every other cost involved in generating that revenue, added together into one figure. |
When to use it
Checking whether a period was actually profitable
Revenue on its own says nothing about profit; a period can post strong sales and still lose money once costs are subtracted. This calculator gives the bottom-line figure directly.
Comparing profit calc results across products or periods
Running the same revenue and cost figures through consistently, period after period, shows whether profit is genuinely growing or just tracking revenue.
Working out how much a cost increase eats into profit
Re-running the calculation with a higher cost of goods sold or other-costs figure shows exactly how many dollars of profit a price rise from a supplier removes.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How profit changes as revenue grows, at fixed costs
Total costs held at $6,000, across a range of revenue levels.
| Revenue | Profit | Profit margin |
|---|---|---|
| $5,000 | −$1,000.00 | -20.0% |
| $10,000 | $4,000.00 | 40.0% |
| $15,000 | $9,000.00 | 60.0% |
| $20,000 | $14,000.00 | 70.0% |
| $30,000 | $24,000.00 | 80.0% |
| $50,000 | $44,000.00 | 88.0% |
How profit changes as cost of goods sold rises, at fixed revenue
Revenue held at $10,000, across a range of cost-of-goods-sold levels.
| Cost of goods sold | Profit | Profit margin |
|---|---|---|
| $1,000 | $7,000.00 | 70.0% |
| $2,000 | $6,000.00 | 60.0% |
| $4,000 | $4,000.00 | 40.0% |
| $6,000 | $2,000.00 | 20.0% |
| $8,000 | $0.00 | 0.000% |
| $10,000 | −$2,000.00 | -20.0% |
Questions
How do you work out profit?
Add up every cost involved in generating the revenue, cost of goods sold plus other costs and expenses, then subtract that total from revenue. What remains is profit.
What is the difference between profit and profit margin?
Profit is a dollar amount: revenue minus costs. Profit margin restates that same profit as a percentage of revenue, which makes it easier to compare businesses or products of different sizes on a like-for-like basis.
Should cost of goods sold and other costs be kept separate?
For this calculation they are simply added together, but keeping them separate when recording figures makes it easier to see whether a profit change came from production costs or from overheads, before entering the totals here.
Is this the same as gross profit or net profit?
It depends what is included in "other costs". Including only direct production costs gives something closer to gross profit; including every operating expense, interest and tax gives something closer to net profit. The calculator does not draw that line for you, so include whichever costs match the figure being sought.
For the same figures expressed as a percentage instead of a dollar amount, see the margin calculator. To find the sales volume needed before a business turns a profit at all, use the break-even point calculator.