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What’s the Difference Between Gross Profit and Net Profit?

I decided to discuss the difference between gross profit and net profit. Many business owners do a lot of number crunching. Especially if you are trying to start a business, I have seen it more often than not where people number crunch all day long to see what they will be making. This goes from regular businesses to MLM businesses. They are constantly calculating the gross profit when in reality you should be looking at net profit.

The main difference between gross profit and net profit in simple terms is that gross profit takes no account of your expenses. Gross profit is your profit in summation to everything you have made. It does not look at expenses such as supplies, wages and salary, equipment, insurance, marketing costs, or any other expenses for that matter.

Net profit on the other hand does take into account all those expenses. Net profit is the money that is actually going into your bank. That is in fact what actually matters. Net profit is what you should be looking at when you are number crunching, but many people fail to do that and look at the gross.

the easy way remember gross profit and net profit if you’re having a hard time remembering it is that “Gross profit” is the “Giant enormous profit.

In this video I explain the concept in a little bit more detail. Check it out and let me know what you think!