Gross Profit

Revenue minus the direct cost of goods sold or services delivered, before deducting operating expenses such as marketing, salaries, and rent.

Gross profit reveals how efficiently a business converts revenue into contribution before overhead. A business with low gross profit margins has little room to absorb operating costs or invest in growth.

A founder sells products for £100,000 and the materials and manufacturing cost £40,000. Her gross profit is £60,000, giving her a 60% gross margin to cover rent, staff, marketing, and her own salary.