Bookkeeping

Gross profit

Gross profit is revenue minus the cost of goods sold. It shows how much the business keeps from each sale before paying operating expenses such as rent, payroll and marketing.

Reviewed November 3, 2026

Why it matters

Gross profit shows whether the product or service itself is profitable. A business can have strong sales and a weak gross profit if the direct costs are too high.

Example

A business sells $200,000 of products and has $120,000 of cost of goods sold. Gross profit is $80,000, or 40% of revenue.

Related terms

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Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

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