How to Calculate Gross Profit Margin Using Excel

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In business, gross profit, gross margin and gross profit margin all mean the same thing. It's the amount of money you make when you subtract the cost of a product from the sales price. When dealing with dollars, gross profit margin is also the same as markup. It's only when you calculate percentages that profit and markup become different concepts.

Gross Profit Vs. Net Profit

Gross profit is almost always calculated by subtracting what you paid for an item from the price you sold it for, and nothing else. For example, if you ran a fruit stand, the cost of an apple is what you paid the wholesaler, and the sales price is what your customer paid you. Your cart rental, transportation costs, licenses and advertising expenses aren't used to calculate gross profit -- that's used for calculating net profit.

Single Unit Cost Vs. Total Costs

Gross profit is calculated the same way, whether you're

calculating the cost of a single item or hundreds of thousands of items.

If you want to calculate gross profit on multiple items, then you should first add the costs and sales prices in a basic spreadsheet. If you have a complex sales system with different lines of goods or different departments, you may want to calculate the gross profit for each department and the organization as a whole. In this case, a spreadsheet with totals and subtotals will give you the costs and sales figures you need.

Gross Margin as a Dollar Amount

Gross margin, or gross profit, is calculated the same, whether you're looking at the profit of a single item or everything you've sold in a year.

Step 1

(Image: Screenshot courtesy of Microsoft.)

Type the total cost of an item or multiple items in any cell in an Excel worksheet. Type the selling price of that item directly below the cost.

Source: ehow.com

Category: Forex

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