Difference Between Revenue and Profit

When you run a business, one of your primary aims is to make a profit and to do that you need revenue. To maximize profit you need to minimize costs.

Definition of Revinue

Revenue is income before costs are deducted.

Sources of Revenue

Revenue could be income from goods or services sold. Revenue can also include rental income from properties that a company owns but leases out.

Definition of Profit

Profit is the money left after costs are taken out.

Types of Profit

Gross profit is revenue minus the cost of goods sold. Net profit is revenue minus the cost of goods sold and all of the other costs involved with the business. Those costs can include salaries, taxes, insurance, rent, and utility bills.

Revenue Doesn't Always Mean Profit

On Nov. 16, 2009 General Motors announced revenue of $26,352,000,000 for the period of July 10 through Sept. 30. In that time period they lost $1,151,000,000.

References

• Princeton.edu: WordNet Search for "Profit"
• Princeton.edu: WordNet Search for "Revenue"
• GM Media website: Preliminary Guidance