Gross Profit Rate is a simple yet powerful metric to measure the financial performance of your business. Put simply, this rate tells you how much money your business keeps after costs associated with providing goods or services are deducted. It’s calculated by subtracting the cost of goods sold from total revenue, then dividing that number by total revenue. Knowing your gross profit rate allows you to make sure sales and expenses line up correctly and provides critical insight into profitability trends over time. Keeping an eye on your Gross Profit Rate can help ensure you have a sound foundation for business success.