Skip to main content
We've updated our brand identity. Learn more

What is Profit?

Definition and meaning of Profit:


Profit is the difference between what it costs to produce something and what you sell it for.

If you’re selling a product for more than it costs, you’re making a profit. It indicates how your business is functioning and performing in the market.

Profit calculation

To calculate your profit, you need to consider a wide range of costs, like material costs, labor costs, overhead expenses, and marketing costs.

  • Positive number – you’re turning a profit
  • Negative number – your business is losing money
  • Zero – you’re breaking even

For example, your business has a revenue of $80,000 per year, and your expenses are $20,000, so your net annual profit is $60,000.

Profit formula

Profit = Revenue – Expenses


People also searched for