Understanding profit per sale and total gross profit
Profit per sale is the difference between selling price and direct cost. Multiplying it by quantity gives gross profit before fixed overheads, tax and other business expenses.
Formula
Gross profit per unit = selling price − direct cost. Total gross profit = profit per unit × quantity.
Example
A product sold for £50 with £30 of direct cost produces £20 gross profit per unit. At 100 sales, that is £2,000 gross profit.
Common mistakes to avoid
- Calling gross profit take-home pay.
- Leaving fulfilment, payment fees or direct labour out of unit cost.
- Looking at total revenue without checking the profit generated by that revenue.
ProfitMaths provides general calculation tools and educational information. Results are estimates and are not accounting, tax, legal or financial advice.