A repository of acronyms, jargon, and useful definitions perfect for eCommerce founders & marketers like yourself.
Gross profit is arrived at by subtracting the total revenue of the company from the cost of goods sold. Where revenue is the total money earned from sales and cost of goods sold refers to all the money that went into the manufacturing and selling of the product. This includes costs such as - wages, raw material costs, utility expenses, transportation costs, etc.
Gross profit margin is a metric that is used by eCommerce companies to assess the profitability of their business.
It is calculated using the formula - (total revenue-cost of goods sold/Total revenue) x 100. It is represented as a percentage and shows the proportion of money that remains after the cost of goods sold has been recovered. For example, if your cost of goods sold is $20,000 and your revenue is $60,000 then your gross profit margin is 20%.