{"id":264287,"date":"2023-07-03T12:53:19","date_gmt":"2023-07-03T00:53:19","guid":{"rendered":"https:\/\/www.reckon.com\/nz\/?page_id=264287"},"modified":"2025-01-29T10:21:25","modified_gmt":"2025-01-28T22:21:25","slug":"gross-profit","status":"publish","type":"glo","link":"https:\/\/www.reckon.com\/nz\/glossary\/gross-profit\/","title":{"rendered":"What is Gross Profit?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description” _builder_version=”4.21.0″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

Gross profit is the profit you make by selling your goods or services, after deducting the cost of goods sold. Cost of goods sold (GOGS) refers to the money and resources required to produce your goods or deliver your services.<\/p>\n

How to calculate gross profit<\/h2>\n

The gross profit calculation formula<\/a> is as follows:<\/p>\n

[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/nz\/wp-content\/uploads\/2024\/05\/gross-profit.png” alt=”Gross profit = revenue – cost of goods sold Gross profit margin = (revenue – COGS) \u00f7 revenue \u00d7 100″ title_text=”Gross Profit” align=”center” admin_label=”Image” _builder_version=”4.25.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Definition description + related terms” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

Why do you need to know your gross profit?<\/h2>\n

Knowing how to calculate gross profit is a great way to better understand how efficient you are in utilising your labour and supplies to produce a profitable offering.<\/p>\n

This metric allows you to drill down into your goods or services and discover how profitable each offering is. You can then identify ways to be more cost-efficient<\/a> in producing your goods or delivering your services.<\/p>\n

Cost of goods sold explained<\/h2>\n

In business, you can deduce the figure for your cost of goods sold by adding up the direct expenses of producing, handling, and delivering your commodities or services.<\/p>\n

Interestingly, cost of goods sold generally includes variable but not fixed costs.<\/p>\n

Gross profit versus net profit<\/h2>\n

While your company’s gross profit only accounts for your cost of goods sold, net profit<\/em> considers all the necessary expenses<\/a> to run your business and produce revenue.<\/p>\n

Although gross profit includes labour and production costs, your net profit goes further\u2014to include everything from electricity bills to business devices.<\/p>\n

What’s a gross profit margin?<\/h2>\n

Your gross profit margin expresses your gross profit as a percentage.<\/p>\n

The gross profit margin formula is as follows:<\/p>\n

Gross profit margin = (Revenue – COGS) \/ Revenue x 100<\/strong><\/p>\n

 <\/p>\n

See related terms<\/strong>
What Is gross profit?<\/a>
Gross profit Vs net profit<\/a>
What is a balance sheet?<\/a>
What is working capital?<\/a><\/p>\n

 <\/p>\n

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Gross profit is the profit you make by selling your goods or services, after deducting the cost of goods sold. Cost of goods sold (GOGS) refers to the money and resources required to produce your goods or deliver your services. 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