Gross Profit vs. Net Profit

Gross profit is revenue minus cost of goods sold (COGS) alone — the direct cost of producing or acquiring what was sold, before any operating expenses. Net profit goes further, subtracting operating expenses, interest, and taxes as well, landing on what's actually left over for the owner.

A business can show strong gross profit while barely breaking even at the net level, if operating expenses (rent, salaries, marketing) are eating everything gross profit generates. Checking both numbers separately, not just one, is what actually reveals whether a pricing or cost problem sits in production or in overhead.