Gross profit
Gross profit definition for SaaS and AI founders: what it means, how to calculate it, and common pitfalls when reading it in dashboards.
Gross profit is the money left after paying the direct costs of delivering your product. It funds sales, marketing, R&D and profit.
Formula
Gross profit = Revenue − COGS
In practice
Gross profit can grow while gross margin falls — if revenue grows slower than costs.
Related terms
Related
- ARPAAverage MRR per paying customer.
- ARRAnnualized recurring revenue: MRR multiplied by twelve.
- CACSales and marketing spend per new customer.
- ChurnCustomers or recurring revenue lost in a period.
- COGSThe direct cost of delivering your product to existing customers.
- Contribution marginRevenue minus all variable costs, including variable sales costs.
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