Accounting Glossary

How To Calculate Gross Profit


Gross Profit (Calculation)

Gross profit is revenue minus the cost of providing the goods or services sold.


Example Of A Gross Profit Calculation

Let’s say your business sold €20,000 worth of products or services, and it cost you €8000 to make those products or provide those services.

€20,000 – €8000 = €12,000

Gross profit is the difference between what you sold goods and services for and what you paid for those same things. It’s only a stepping stone to net profit. You still have to pay for things like office supplies, rent, and loan repayments out of your gross profit.

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