How to Calculate Profit in Business? (E-commerce Edition)
- Gross profit is the money left after subtracting the cost of producing your product.
- Net profit is what’s left after all expenses, like rent, salaries, and taxes, are deducted.
- Raw materials
- Labor costs for production
- Manufacturing expenses
- COGS (already explained in gross profit)
- Operating Costs: Rent, utilities, salaries, marketing
- Taxes: Government taxes on income
- Other Expenses: Interest on loans, insurance, etc.
- Sales from products or services
- Interest from investments
- Other income like royalties or rental income
- COGS (Cost of Goods Sold): These are direct costs like raw materials, manufacturing, or production labor.
- Operating Expenses: These are ongoing costs like rent, utilities, payroll, and marketing.
- Other Expenses: This includes taxes, interest on loans, or one-time charges like legal fees.
Irene Le
Content Manager at TrueProfit & eCommerce Marketing Specialist
Irene Le is the Content Manager at TrueProfit, specializing in crafting insightful, data-driven content to help eCommerce merchants scale profitably. With over 5 years of experience in content creation and growth strategy for the eCommerce industry, she is dedicated to producing high-value, actionable content that empowers merchants to make informed financial decisions.
