To be a successful company, two key metrics must be tracked: revenue and profit. These numbers reveal the financial strength of a company, and what the future might look like. Although many use these two terms interchangeably, they are two vastly different concepts. Let’s take a look at revenue vs. profit to distinguish their differences, and learn how Rockton Pricing Management can help those numbers climb higher.
Revenue is commonly referred to as the top line. When you look at an income statement the revenue number sits at the top. Revenue is the income a company generates before subtracting any expenses.
Profit is commonly referred to as the bottom line, or net income. It is often categorized into two sub-classes to help analyze how a company is performing:
- Gross Profit: Revenue minus cost of goods sold. This amount factors the cost of labor and materials used to create a company’s products.
- Operating Profit: Gross Profit minus fixed and variable expenses like rent, utilities, or payroll.
Revenue vs. Profit: The Key Difference
When someone is inquiring about a company’s profit, they are typically referring to net income. While it is important to know what a company makes during its day to day operations (revenue), a more accurate representation of how a company is doing is to look at its net income as it accounts for all expenses.
*Fun Fact: A company can generate revenue, but have a net loss at the same time.
Increase Profits with Rockton Pricing Management
Do you want to maximize your company’s profits? Rockton Pricing Management is the most flexible, powerful, multi-platform pricing solution available. It makes your work simpler and easier® by streamlining the pricing processes of your company. With sophisticated features like automation of complex and obscure pricing scenarios, date-driven pricing, and simplified price lists, your company’s efficiency will dramatically increase – reducing the cost of resources – and resulting in increased profits!
Want to improve your bottom line?
Schedule a free demo to learn more.