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Gross Profit (GP)

Gross profit is the revenue remaining after deducting the cost of goods sold (COGS), typically the landed cost of the product. Formula: Gross Profit = Revenue − COGS

Why It Matters

  • •Represents the core value created by each SKU before marketplace fees, fulfillment, and other variable costs.
  • •Basis for gross margin and higher-level profitability analysis.
  • •Useful for comparing product lines when variable expenses are similar.

Connection to Capital

Gross profit provides the initial return from each sale, but must be evaluated together with cycle time and capital lock to understand true financial performance.

Related Terms

Revenue COGS (Cost of Goods Sold) Contribution Profit

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