Home › Glossary › Gross profit
What is Gross profit?
Gross profit is revenue minus the direct cost of delivering it (materials, direct labor) — before rent, admin, and other overhead. It measures whether your core offering makes money, ignoring how the business is run. Gross margin is the same figure as a percentage of revenue.
In practice
A bakery sells $12,000 of bread in a week; flour, yeast, and baker wages cost $5,000. Gross profit = $7,000 (58% gross margin) — before rent and utilities.
Check if the job itself pays
Run your numbers through Billia's free profit margin calculator.
Open the profit margin calculatorFrequently asked questions
What counts as a direct cost?
Costs that exist because of that specific sale: materials, subcontractors, direct labor hours. Rent and insurance are overhead — they go below gross profit.
Why track gross profit separately from net?
It isolates pricing from operations. Falling gross margin means your prices or job costs are wrong; falling net margin with steady gross margin means overhead is the problem.
Can gross profit be negative?
Yes — and it's an emergency. It means you're losing money on every sale before overhead. Raise prices or cut direct costs immediately.