Definition
Gross profit is revenue minus COGS. Many unit economics models should use gross profit (not revenue) as the value created.
Formula
Gross profit = revenue - COGS
Measured as
Gross profit = revenue - COGS
Operator takeaway
- Tie Gross Profit to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Decide whether Gross Profit belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
- If the number changes, trace the timing, policy, or balance-sheet assumption behind it before you react.