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Xero Gross Profit

Gross Profit is a financial metric that shows the profit earned by a business after deducting the cost of goods sold from its revenue. It represents the amount of money left after accounting for the direct expenses associated with producing and selling a particular product or service.

With Databox you can track all your metrics from various data sources in one place.

Gross Profit $400,000 Start tracking this metric
  • About
  • Tech details

What Is Gross Profit

Gross profit is a financial metric that represents the amount of money a company earns from its core business operations after deducting the direct costs associated with producing or delivering its products or services.
It’s one of the most important metrics companies look at when analyzing their operational efficiency and cost-effectiveness.

How to Calculate Gross Profit

You can calculate your gross profit by subtracting the cost of goods sold from the total revenue.

Here’s the exact formula:

Gross Profit = Total Revenue – Cost of Goods Sold

For example, if a company has a total revenue of $500,000 and the cost to produce the service is $100,000, we see that the gross profit amounts to $400,000.

What Is a Good Gross Profit Margin

Due to the wide range of factors that influence a business’s gross profit, we can’t really put a pin on what’s good or not. You need to consider things like industry, business mode, size, and the overall economy.

For example, a good gross profit margin in the aviation sector would fall in the range of 10-20%. In the consulting industry and similar service-based businesses, it can go up to 40%.

On the other hand, software companies have a higher gross profit rate, often in the range of 70-90%, due to the low cost of duplicating their service once it’s developed.

Here’s also some data directly from our product:

A good gross profit in QuickBooks is around $50,000 to $80,000, according to QuickBooks Benchmarks for All Companies.

A good gross profit in Xero is $44,000, according to Xero Benchmarks for All Companies.

If you want to stay on top of future trends and be able to instantly compare your performance to companies just like yours (in any given industry), you can join our Benchmark Groups – it’s free for everyone!

How to Increase Gross Profit

There is no one-size-fits-all approach to increasing your gross profit. Each business requires a tailored strategy based on its product, market conditions, and operational efficiency.
However, after talking with seasoned industry leaders, we’ve compiled a few strategies that can bring some solid results in each industry.

  • Set a high-profit margin from the get-go: There are several arguments for why it’s better to set a high profit margin from the beginning, but one big reason is that it helps avoid frequent changes in pricing. As a new company’s turnover increases due to scale, variable costs decrease while fixed costs change significantly. This can lead to several price changes during a single month, which can easily frustrate customers. With a higher profit margin from the get-go, you can minimize these fluctuations and keep the price somewhat stable.
  • Pay attention to the approach to presentation ratio: Sales representatives play a major role in driving your gross profit, and that’s no big secret. But are you using the proper metrics to assess their performance? One overlooked metric that you should analyze is the approach to presentation ratio. This metric gives you valuable insight into how well sales reps approach the leads and build a rapport with them before moving on to the presentation for closure.

More resources to help you improve:

Visualizations

  • Databox visualization

    Number

    Used to show a simple Metric or to draw attention to one key number.

  • Databox visualization

    Pie Chart

    Used to illustrate numerical proportions through the size of the slices.

  • Databox visualization

    Bar and Line Chart

    Used to show comparisons between values.

How to track Gross Profit in Databox?

Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.

To track Gross Profit using Databox, follow these steps:

  1. 1
    Connect Xero that contains the metric you want to track
  2. 2
    Select the metric you want to track from the list of available metrics
  3. 3
    Drag and drop the selected metric onto your dashboard
  4. 4
    Watch your dashboard populate in seconds
  5. 5
    Put Gross Profit on the Performance screen
  6. 6
    Get Gross Profit performance daily with Scorecards or as a weekly digest
  7. 7
    Set Goals to track and improve performance of Gross Profit
Xero integration with Databox Track Gross Profit from Xero in Databox GET STARTED

Xero Gross Profit included in Dashboard Templates 1

  • Live view

    Xero Account Balance Overview

    Xero’s dashboard template provides you with insights about cash flow, bank accounts, sales and expenses entered in Xero to stay on top of your business.

    Xero

Basics

  • Description
    Gross Profit is a financial metric that shows the profit earned by a business after deducting the cost of goods sold from its revenue. It represents the amount of money left after accounting for the direct expenses associated with producing and selling a particular product or service.
  • Category
    Accounting
  • Subcategory
    Profit
  • Date Added
    2017-03-09
  • Default Format
    PrefixCurrency
  • Cumulative Support
    Yes
  • Units
    Yes
  • Granularities
    monthly, quarterly, yearly
  • Favorable Trend
    increasing
  • Historical Data
    Yes
  • Changing historical data
    Yes
  • Forecast Support
    Yes
  • Benchmark Support
    Yes
  • Media Support
    No
  • Dimension
    N/A
  • Metric Type
    general Learn more
  • API Endpoint
    https://api.xero.com/api.xro/2.0/reports/ProfitAndLoss

Questions? We've got answers.

  • What’s the difference between net profit and gross profit?

    Net profit takes gives a more granular view of your business’s finance. It deducts all business expenses, including operating expenses, interest, taxes, and cost of goods sold, from your total revenue.
    Gross profit only deducts the direct costs associated with producing your goods or services.

  • Gross Profit vs. Gross Profit Margin

    While gross profit is displayed through a dollar amount, the gross profit margin presents this value as a percentage, showing the proportion of each dollar of revenue that you retain as gross profit.

  • What Is an Example of Gross Profit?

    Let’s say a company produces and sells high-quality laptops.
    They manufacture each laptop for $500 and sell each one for $1,200. Thus, the gross profit for each laptop sold would be the selling price minus the cost to produce.
    Gross Profit = Selling Price – Cost of Goods Sold Gross Profit = $1,200 – $500 Gross Profit = $700
    For each laptop sold, the company makes a gross profit of $700.

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