What is gross profit?

Gross profit is the amount of money your business makes from sales after deducting the cost of making and selling your product. This amount is before you pay operating costs, payroll, tax and overhead.

Gross profit reflects how profitable a product is. The less it costs to make, and the higher you can sell it for, the larger your gross profit will be. Gross profit is also known gross income, and appears on the income statement.

 

Related terms:
What is net income?
What is a profit and loss statement?
How to calculate gross profit
How to calculate net profit margin

Related Xero feature:
Know how your business is performing with the business dashboard

Related Small Business Guide:
How to manage your finances and cashflow

Accounting Terms

Accounting terms and how-tos for beginners. Let us walk you through all the basics that you need know.

What is gross profit?

Gross profit is the amount of money your business makes from sales after deducting the cost of making and selling your product. This amount is before you pay operating costs, payroll, tax and overhead.

Gross profit reflects how profitable a product is. The less it costs to make, and the higher you can sell it for, the larger your gross profit will be. Gross profit is also known gross income, and appears on the income statement.

 

Related terms:
What is net income?
What is a profit and loss statement?
How to calculate gross profit
How to calculate net profit margin

Related Xero feature:
Know how your business is performing with the business dashboard

Related Small Business Guide:
How to manage your finances and cashflow

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