Back to Glossary

Net Profit (Net Income)

Net profit is the profit remaining after subtracting both variable costs (fees, fulfillment, shipping, variable PPC) and fixed overhead (salaries, software, rent, accounting, etc.) from revenue.

Why It Matters

•Shows whether the business as a whole generates value after all expenses.
•Distinct from SKU-level profitability, which is usually measured at contribution profit level.
•May look healthy even when liquidity is weak, because net profit does not reflect cash timing, capital lock, or working capital requirements.
•Important for long-term strategic decisions, financing, and valuation.

Connection to Capital

Net profit indicates whether the total deployed capital is increasing or being consumed once all operating costs are accounted for.

Related Terms

If a term is missing, you'd like it explained, or you have suggestions for improvement — we'd love to hear from you. Contact Us →