Business Australia
Gross Profit Calculator Australia
Gross profit is what is left of your sales after the direct cost of what you sold, and it is the number that has to cover everything else. Enter your sales, your cost of goods and your running costs to see gross profit, gross margin, net profit and markup together.
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Stock, materials and direct labour for what you sold.
Gross profit
—Gross margin
—
Markup on cost
—
Net profit
—
Net margin
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Costs as a share of sales
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Profit and loss
General information only. General information and estimates only, not financial, tax or legal advice. Rates, thresholds and rules change, so check with the ATO or a registered tax adviser before you act.
How do I calculate gross profit?
Subtract the cost of goods sold from sales, both excluding GST. $250,000 of sales with $140,000 of cost of goods gives $110,000 of gross profit, a gross margin of 44%. After $70,000 of running costs the net profit is $40,000, or 16% of sales.
Gross profit versus net profit
Gross profit shows whether your pricing and buying work: it is the margin on what you sell. Net profit shows whether the whole business works, after rent, wages, software and the rest. A business can have a 50% gross margin and still lose money if overheads are too high.
Track both each month, because gross margin falling is an early warning of discounting or rising supplier costs.
Using margins to improve
To lift gross profit, raise prices, negotiate supplier costs, reduce waste or shift the mix towards higher-margin products. A one-point rise in gross margin on $250,000 of sales is $2,500 of extra profit with no extra sales.
To lift net profit, look at overheads too, though cutting costs that bring in sales can backfire.
To set a price from a margin, use the markup calculator.
How this is calculated
The rule, step by step, so you can check any figure by hand.
gross profit = sales − cost of goods soldgross margin % = gross profit ÷ sales × 100markup % = gross profit ÷ cost of goods sold × 100net profit = gross profit − running costs − depreciation and interestnet margin % = net profit ÷ sales × 100
Use figures excluding GST throughout, because GST collected belongs to the ATO and GST paid is claimed back as a credit if you are registered. Including it overstates both sales and costs.
Cost of goods sold is the direct cost of what you actually sold in the period, which can differ from what you bought if stock changed. Running costs are the overheads you pay whether or not you sell anything.
A worked example
Sales of $250,000, cost of goods of $140,000 and running costs of $70,000.
- Gross profit$110,000
- Gross margin44.0%
- Markup on cost78.6%
- Net profit$40,000
- Net margin16.0%
A 44% gross margin and a 16% net margin.
A healthy gross margin can still hide a thin net margin once overheads are counted.
Tax and your books
Tax is worked out on taxable profit, which can differ from this figure because of depreciation rules, non-deductible items and timing. Keep your records with your bookkeeper or accountant, who can apply the rules to your situation.
What it leaves out
Owner wages, tax and loan principal repayments are not shown. Add owner wages to running costs for a true picture of what the business earns.
What this calculator does not do
- One period at a time
- Figures excluding GST
- No tax calculation
- General information, not accounting advice
Common questions
What is gross profit?
Sales minus the direct cost of the goods or services sold.
What is gross margin?
Gross profit as a percentage of sales.
Is gross profit the same as net profit?
No. Net profit is after running costs, depreciation and interest.
Should figures include GST?
No. Use figures excluding GST.
What is a good gross margin?
It varies by industry, so compare with your own overheads and with similar businesses.
Where these numbers come from
- business.gov.au — running a business Government guidance on pricing, costs and starting out
- ATO — GST The 10% GST rate and the registration turnover threshold
Method last reviewed 2026-10-28 This calculator uses fixed rules rather than rates that change, and its method is re-checked against the sources above at least once a year. Out of date? Tell us and we will fix it.
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