GP Calculator

Gross profit from resale price and cost

Enter the price excluding VAT and the cost of the goods.

Fill in the fields above and the answer appears here.

Profit—
Margin—
Markup—
Cost—
Revenue—

CostProfit

The working out is shown here once the calculator has enough information.

What is gross profit?

Gross profit is the cash left after you pay for the thing you sold. Buy a cable drum at £184, sell it at £229, and £45 is your gross profit. Set that £45 against the £229 you took and you get 19.65%, the GP percentage.

Both numbers earn their keep. The pound figure tells you what actually reached the till. The percentage lets you hold a cable drum next to a light fitting, or this week next to last.

Gross profit stops early, on purpose. It ignores rent, wages, the van, the insurance, everything that keeps the business open. Good for reading how well you buy and price. Useless for telling you whether you are making money overall.

How is GP used day to day in UK trades?

The abbreviation shifts meaning slightly depending on which counter you are standing behind.

Hospitality

GP is spoken as a percentage and looked at weekly. Managers hold a target per category: draught, bottled, spirits, wine, food. The interesting number is the gap between theoretical GP, worked out from recipes and prices, and actual GP from the stock count. That gap is how over-pouring, waste and the occasional missing bottle get found.

Retail and wholesale

GP is quoted per line and per department. Buyers negotiate on it, and a supplier offering better terms is offering GP points rather than a discount. Trade counters tend to quote markup instead, so the same conversation contains both percentages and somebody has to translate. Our margin vs markup guide handles that translation.

Trades and contracting

GP on materials gets separated from GP on labour, because the two behave nothing alike. Materials carry a modest percentage on a large number. Labour carries a large percentage on a smaller one. Blend them and you lose sight of which half of the job is paying you.

Should you manage GP in pounds or in percent?

Both, for different decisions. Percentages decide pricing. Pounds decide whether the business survives.

A 70% GP on a £3.40 coffee is £2.38. A 20% GP on a £229 cable drum is £45. The coffee wins the percentage contest easily and brings home a nineteenth of the cash. Chase the percentage on its own and you drift toward high-margin, low-value lines that never cover the overhead, which is roughly the story of every café that added a gift shelf and wondered why nothing changed.

Check the percentage when you set a price. Check the pound figure when you plan volume. Once you know what each sale contributes in cash, our break-even calculator works out how many of them cover the fixed costs, and the net profit margin calculator shows what is left at the end of it.

GP questions

What does GP stand for?
Gross profit. In UK hospitality and retail the abbreviation is usually spoken as a percentage, so "we run 68 GP" means a 68% gross margin rather than £68 of profit.
How do you calculate GP?
Subtract the cost of the goods from the resale price. Selling at £229 something that cost £184 gives £45 of gross profit, which is a 19.65% GP percentage.
What GP should a pub run on drinks?
Wet sales commonly sit between 65% and 75%, with draught lager at the lower end and spirits at the higher end. Falling below the band usually points to pour accuracy or unrecorded staff drinks rather than pricing.
Is GP calculated before or after VAT?
After VAT is removed. A till reports gross takings including VAT, so divide by 1.2 at the standard rate before comparing against cost.
What is the difference between GP and net profit?
GP stops at the cost of the goods. Net profit continues through rent, wages, utilities, interest and tax, and is almost always a much smaller percentage.

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