Gross profit

Gross profit (and gross margin) measures how profitable the work itself is. It's not your take-home: overhead and operating expenses come out of gross profit to get net profit. Healthy gross margin is necessary but not sufficient for a profitable business.

Related terms

• Net profit — Net profit is what's left after all costs — direct job costs plus overhead and operating expenses — i.e., the actual bottom line.
• Margin (gross margin) — Margin is profit measured against your price — the percentage of the sell price that's profit after costs.
• Overhead — Overhead is the cost of running your business that isn't tied to one job — truck, tools, office, insurance, admin — recovered by adding it to every bid.