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GROSS PROFIT

GP Calculator

A quick GP calc for products, food and drink with VAT or GST, and staffing bill rates. Find your GP % or the price that hits a target.

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WHAT GP MEANS

GP is gross profit: sales minus the direct cost of those sales.

GP % is that profit as a share of net sales. The math is the same for a product, a pint, or an hour of contract work. What changes is which cost you subtract and whether tax is inside the price. For margin and markup on a single item, the profit margin calculator gives the same result.

FORMULA

GP % formula

Take the direct cost away from the net selling price. Divide that gross profit by the net selling price and multiply by 100. A $12 sale with a $7 cost leaves $5 of gross profit.

GP %(Net selling price − direct cost) ÷ net selling price × 100

EXAMPLE

$12 selling price, $7 cost

Gross profit is $5. Divided by the $12 price, that is a 41.67% GP. The same $5 divided by the $7 cost is a 71.43% markup.

Gross profit
$5.00
GP %
41.67%
Markup
71.43%

FOOD AND DRINK

Take VAT or GST out before you work out GP %.

A £6.00 pint at 20% VAT is £5.00 of net sales. With a £1.50 cost, GP is £3.50, or 70%. Working from the £6.00 menu price gives 75%, which overstates GP by five points. Pubs and restaurants often track drinks as wet GP and food as dry GP.

Net price
£5.00
Gross profit
£3.50
GP %
70%

STAFFING

Add employer burden to pay before you work out GP.

A $45 bill rate and a $30 pay rate look like a $15 spread. With 12% burden, the loaded cost is $33.60, so GP is $11.40 an hour, or 25.33%. In the US, employer Social Security and Medicare alone are 7.65% of wages (IRS Topic 751). Federal unemployment tax is 0.6% of the first $7,000 per employee when the full state credit applies (IRS Topic 759). State unemployment and workers' compensation rates vary by state and job.

Loaded costPay rate × (1 + burden)

GP per hourBill rate − loaded cost

GP %GP per hour ÷ bill rate

Markup on pay(Bill rate − pay rate) ÷ pay rate

PRICE FOR A TARGET GP

Divide cost by one minus the target.

A 70% target means the cost can be 30% of the net price, so the price is the cost divided by 0.3. Multiply the cost by the figure in the table, then add VAT or GST if your prices include it.

30% GPCost × 1.43 · 42.86% markup

40% GPCost × 1.67 · 66.67% markup

50% GPCost × 2.00 · 100% markup

60% GPCost × 2.50 · 150% markup

65% GPCost × 2.86 · 185.71% markup

70% GPCost × 3.33 · 233.33% markup

75% GPCost × 4.00 · 300% markup

BENCHMARKS

Gross margin by US industry, January 2026

From Aswath Damodaran's margins by sector dataset at NYU Stern, covering 5,994 US public companies. Company cost of sales can include more than stock or ingredients, so a menu or product GP % will not match these figures directly. Use them for broad context and your own history for targets.

Software (system and application)71.72%

Hotel and gaming60.85%

Apparel56.88%

Alcoholic beverages46.96%

Business and consumer services33.38%

General retail33.18%

Restaurants and dining32.24%

Grocery and food retail26.31%

All US companies37.76%

QUESTIONS

GP questions

What does GP mean?

GP stands for gross profit: net sales minus the direct cost of those sales. GP % is gross profit divided by net sales, multiplied by 100. It is the same number as gross margin.

How do you calculate GP %?

Take the direct cost away from the net selling price. Divide the result by the net selling price, then multiply by 100. A $12 sale with a $7 cost gives $5 of gross profit and a 41.67% GP.

How do you calculate GP with VAT or GST?

Remove the tax from the menu price first. Divide the menu price by 1 plus the tax rate, so a £6.00 price at 20% VAT is £5.00 of net sales. Then subtract the cost, excluding VAT, and divide by the net price. A £1.50 cost gives a 70% GP.

What is the difference between GP % and markup?

GP % divides gross profit by the selling price. Markup divides gross profit by the cost. A $7 cost sold for $12 has a 41.67% GP and a 71.43% markup. Markup is always the higher number when both are positive.

What is a good GP %?

It depends on the industry. In Aswath Damodaran's January 2026 data for US public companies, gross margin was 71.72% for system and application software, 33.18% for general retail, and 37.76% across the whole market. Compare your GP with your own history and with businesses that count costs the same way.

What are wet GP and dry GP?

Pubs, bars, and restaurants use wet GP for drinks and dry GP for food. They are tracked separately because drink and food costs, waste, and pricing behave differently.

How do staffing agencies calculate GP?

Add employer burden to the pay rate to get the loaded cost per hour. Subtract that from the bill rate for gross profit per hour, then divide by the bill rate for GP %. A $45 bill rate and $30 pay rate with 12% burden gives $11.40 an hour and a 25.33% GP.

Why is my actual GP lower than the calculator shows?

The calculator shows theoretical GP from a recipe, pour size, or rate. Waste, spillage, over-portioning, discounts, free items, and stock losses lower actual GP. Compare theoretical GP with GP from your stock counts to find the gap.

Is GP the same as net profit?

No. GP only subtracts direct costs such as stock, ingredients, or worker pay. Net profit also subtracts overheads such as rent, salaries, software, interest, and tax.

GP Calculator: Gross Profit and GP % | TinyKPI