What is gross profit?

Gross profit is the revenue remaining after subtracting the cost of goods sold (COGS). The formula is: Gross Profit = Revenue - COGS. For example, if revenue is $100,000 and COGS is $40,000, gross profit is $60,000.

What is the difference between gross profit and net profit?

Gross profit only subtracts COGS from revenue. Net profit subtracts all expenses including marketing, salaries, rent, software, taxes, and interest. A store might have 60% gross margin but only 15% net margin after operating expenses.

What is a good gross margin for ecommerce?

Good gross margin varies by industry. Beauty & Cosmetics averages 65%, Fashion & Apparel averages 55%, Health & Wellness averages 55%, Home & Garden averages 45%, Food & Beverage averages 40%, and Electronics averages 25%. Above 50% is generally considered healthy for most verticals.

How can I improve my gross margin?

Five key strategies: (1) Negotiate better supplier pricing. (2) Raise selling prices strategically. (3) Optimize shipping and fulfillment costs. (4) Eliminate low-margin products from your catalog. (5) Bundle products to increase perceived value and blended margin.

What is the difference between gross profit and gross margin?

Gross profit is a dollar amount (Revenue - COGS). Gross margin is a percentage ((Gross Profit / Revenue) x 100). For example, $100,000 revenue minus $45,000 COGS equals $55,000 gross profit and 55% gross margin. Margin is more useful for comparing performance over time and against competitors.

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Gross Profit
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Gross Profit
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