The difference between a company's total revenue and its total cost of goods sold. It's also referred to as gross margin or gross income. You can calculate gross profit by subtracting the cost of goods sold (COGS) from the total revenue. For example, if a company had $10,000 in revenue and $4,000 in COGS, the gross profit would be $6,000. Gross profit appears on a company's income statement.
Gross profit determines how well a company can earn a profit while managing its production and labor costs. Net profit is the gross profit minus the cost of all business operations and non-operations.