How this instrument works
Revenue is the simplest figure in a set of accounts and the easiest to get wrong by omission: it is nothing more than how many units moved times what each one sold for. Sell 1,200 units at $25 and the top line reads $30,000, full stop — no costs, discounts or taxes have touched that number yet. Everything else in a business's finances sits below this line, which is why it is usually the first cell filled in on any sales forecast.
Gross profit here carries that same units figure one step further: multiply by what survives of the price after the cost per unit is paid, rather than by the price alone. At $25 a unit with $15 of cost behind each one, ten dollars survives per sale, so 1,200 sales clear $12,000. That is not the layered margin percentage or the break-even volume this site calculates elsewhere — no fixed costs, no threshold — just the direct profit on the units actually sold.
Treat it as the fast first pass before those deeper sheets. Someone pricing a new product, checking whether a bulk order still clears its cost, or sanity-checking a sales target reaches for this because it needs only three numbers and returns an answer immediately. Its limit is exactly its speed: nothing here accounts for returns, sales tax collected on behalf of a state, payment processing fees, or the overheads that a margin or break-even sheet brings into the arithmetic.
- Enter Units sold for the batch, month or launch you are sizing up.
- Set Price per unit, $ to what a customer actually pays for one unit.
- Set Cost per unit, $ to what one unit costs you to produce, stock or deliver.
- Read Total revenue for the top line, and Gross profit for what survives once the cost per unit is paid.
Worked example — 1,200 units at $25
An online shop runs a one-month launch for a new phone case, selling 1,200 units at $25 each. Feed those two figures into the sheet — 1,200 units sold, a $25 price — and Total revenue reads 1,200 × 25 = $30,000, the exact amount that lands in the shop's account before a single bill is paid.
Each case costs $15 to source, print and ship, so Gross profit follows the second line: 1,200 × (25 − 15) = 1,200 × 10 = $12,000. That is the cash left over to cover the shop's rent, advertising and wages — not the shop's final profit, since none of those costs have been subtracted yet, only the direct cost of the goods themselves.
Questions
Is this the same as gross margin?
No. Gross margin turns the same profit into a percentage of revenue — divide the $12,000 here by the $30,000 revenue and margin reads 40%. This sheet stops at the currency figures; reach for a margin calculator once you want that profit expressed as a rate rather than a dollar amount.
Why doesn't Gross profit equal net profit?
Because gross profit only removes the cost of the units themselves — materials, stock, direct production or sourcing. Rent, salaries, marketing, loan interest and tax all still come out of it before anything counts as net profit. Treat this figure as a ceiling on what a business could keep, not the final number on a statement.
Does Total revenue include sales tax or discounts?
No, and it should not. Enter Price per unit as what you actually keep per sale — after any standing discount, before tax collected on behalf of a state. Tax passes through a business rather than belonging to it, so folding it into revenue overstates the top line by exactly the amount owed back later.
How is this different from a break-even calculator?
Break-even works backwards from fixed costs to find the volume that covers them; this sheet works forwards from a volume already in mind to the revenue and profit it produces. Use this one to test a scenario quickly, and a break-even sheet to find the floor of units beneath it.
Why would Gross profit come out negative?
It means Cost per unit is set higher than Price per unit, so every sale loses money before any overhead is even counted. The arithmetic still runs honestly and reports the loss; a negative figure here is the earliest possible warning that a price needs raising or a supplier needs replacing.
References
- U.S. Small Business Administration — plan and manage a business
- Internal Revenue Service — Publication 334, Tax Guide for Small Business
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.