What is the difference between revenue and profit?
Revenue is the total that came in from sales before any cost is deducted. Profit is what remains after every expense is subtracted. Revenue can be high while profit is negative at the same time.
A worked example
| Item | Value |
|---|---|
| Revenue (total sales) | 1,000,000 |
| Less: cost of goods sold | 650,000 |
| Gross profit | 350,000 |
| Less: rent, wages, expenses | 300,000 |
| Net profit | 50,000 |
Revenue is a million; profit is fifty thousand. The gap between them is what decides whether your business survives.
The practical takeaway
Watch net profit, not revenue. Rising sales alongside flat profit means costs are climbing at the same rate — a signal worth investigating immediately.
Frequently Asked Questions
No. That million is revenue. Profit is what remains after the cost of goods, rent, wages and every other expense, and it can be far smaller, or negative.
Gross profit is revenue minus the cost of goods sold only. Net profit is what remains after all other expenses too, such as rent, wages and taxes.
Usually because the profit is tied up in stock, or in receivables you have not collected yet. Profit is an accounting measure; cash is what is actually in the till, and the two do not always match.
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