# Difference between Gross Profit and Gross Margin

Gross Profit Vs. Gross Margin

Gross Profit is the profit that a company makes after deducting the cost of goods sold (COGS) from its revenue. COGS includes the direct costs of producing or acquiring the goods that a company sells, such as raw materials, labor costs, and manufacturing overheads. Gross Profit is calculated by subtracting COGS from the revenue

Gross Profit = Sale-COGS

Gross Margin Gross margin is a percentage that represents the amount of revenue a company keeps after accounting for the direct costs of producing its products or services. It’s calculated by dividing gross profit by total revenue and multiplying the result by 100. This figure represents the percentage of revenue that is left over after accounting for the costs of production.

Gross Margin = Gross Profit/Sale*100

Example :

Sale  =100

COGS = 50

Gross Profit = Sale-COGS

Gross Profit = 100-50 = 50

Gross Margin = Gross Profit/Sale*100

Gross Margin =  50/100*100 = 50%