Profit: GCSE Business Definition

What is profit?

In GCSE Business, profit is the money left over from revenue after all costs have been accounted for. If costs exceed revenue, a loss is made.

Most businesses have the main objective of making a profit. Profit helps new businesses survive and break even. For established businesses, profit made in previous years (retained profit) can be used to fund long-term growth. For entrepreneurs and investors, profit is a reward for the risks taken in setting up and running a business. The amount of profit made by a business can indicate how successful it is.

Types of profit

There are two main types of profit:

Gross profit

This is the difference between sales revenue and the costs directly related to production. It is calculated using the formula 

Gross profit = Revenue - Cost of sales

Net profit

This is the difference between gross profit and all other business expenses. It is sometimes called the ‘bottom line and is calculated using the formula 

Net profit = Gross profit - Expenses

Profit Revision Resources to Ace Your Exams

Save My Exams has a great range of resources to explore the topic of profit further. 

Read our GCSE Business revision notes on profit, revenue, and costs, or test your knowledge of profit in our exam questions to improve your grades. 

Explore GCSE Business Revision Resources