Profit Calculation Examples — Real Numbers, Step by Step
The best way to understand profit calculation is through real examples. Below you'll find worked examples for four different business types — each showing gross profit, net profit, and profit margin using actual numbers. Use these as templates for your own profit calculations.
Profit Formulas (Quick Reference)
Gross Profit
Revenue − COGS
Net Profit
Revenue − COGS − Expenses
Profit Margin
(Net Profit ÷ Revenue) × 100
4 Real Profit Calculation Examples
Retail Store
Revenue
$85,000
COGS
$52,000
Overhead
$18,000
Net Profit
$15,000
Gross Margin
38.8%
Net Margin
17.6%
Gross Profit
$33,000
Freelance Designer
Revenue
$72,000
COGS
$8,000
Overhead
$12,000
Net Profit
$52,000
Gross Margin
88.9%
Net Margin
72.2%
Gross Profit
$64,000
E-commerce Shop
Revenue
$120,000
COGS
$68,000
Overhead
$22,000
Net Profit
$30,000
Gross Margin
43.3%
Net Margin
25.0%
Gross Profit
$52,000
Restaurant
Revenue
$380,000
COGS
$152,000
Overhead
$145,000
Net Profit
$83,000
Gross Margin
60.0%
Net Margin
21.8%
Gross Profit
$228,000
Calculate Your Own Profit
Enter your revenue and costs to get instant gross profit, net profit, and margin.
Frequently Asked Questions
What is the difference between gross profit and net profit?
Gross profit = Revenue − Cost of Goods Sold (COGS). Net profit = Revenue − COGS − Operating Expenses − Taxes. Gross profit shows production efficiency; net profit shows overall business health.
What is a good profit margin?
It varies by industry. Software: 20–40% net margin. Retail: 2–5%. Restaurants: 3–9%. Consulting: 15–30%. Compare your margin to industry benchmarks, not a universal standard.
How do I increase profit without raising prices?
Reduce COGS through better supplier negotiation, cut overhead costs, improve operational efficiency, upsell higher-margin products, and reduce customer acquisition costs.
What is the profit formula?
Gross Profit = Revenue − COGS. Net Profit = Revenue − COGS − Operating Expenses. Profit Margin % = (Net Profit ÷ Revenue) × 100.
Can a business have high revenue but low profit?
Yes. High revenue with thin margins is common in retail and restaurants. A business making $1M in revenue but spending $980k has only a 2% profit margin — very vulnerable to any cost increase.
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