This article creates a generic grade concept that is a synthesis of wide range of terminologies linked with different
paper types produced in paper mills. Nearly all paper mills and their system providers define the type and concepts
of paper in different ways. The starting point in the grade concept is that it supports the diversified and reliable product
profitability calculation as much as possible. Due to the complex nature of grade concept in the paper mills, ontology is
used to achieve formal and explicit format for its definition. The formality is understood as an exact description of the
concept, which in this article means a mathematical model for the product profitability calculation. The explicit approach
means that the concept can be run in a computer by using the third normal mode entity relationship charts (ER). The functionality
of the equations is demonstrated by a numerical example.