5 Difference Between Revenue and Profit

Revenue and profit are both very important for any organization. Every organization wants to increase its revenue because it’s the revenue which decides the fate of the organization. To gain more profit it is very important to increase the revenue. More the revenue, the more the profit. Revenue is the total earning from all the different activities in a certain period.

While profit is the total amount after the deduction of all expenses and cost of the products. To understand the difference between Revenue and Profit we have to understand the concept of revenue and profit very well. In this article we will discuss in detail the meaning of revenue and difference between the revenue and profit.

Revenue vs Profit

Sr. No.	Revenue	Profit
1	Revenue is the total earning of the business and organizations after selling products and services without deduction of expenses.	Profit is the total amount left after the deduction of the expenses.
2	Revenue is a superset of income.	Profit is the subset of the revenue.
3	Revenue = No. Of units sold x selling price per unit.	Profit = Revenue-Expense.
4	Revenue is not dependable on profit.	Profit is dependable on revenue.
5	Types of revenue are operating revenue and Non-Operating revenue.	Profit has three categories Gross profit, Operating profit and Net Profit.

Revenue

Revenue is defined as the total earning of any business or organization from all the primary and subsidiary business. It is the total earning of product selling and delivery of services. Revenue is the bone of any business which helps to increase the profits.

Revenue has two types which are operating revenue and non operating revenue.

Operating revenue –

this is the revenue which is generated by the main products or services of the company. This is the revenue which is generated by the day to day life activities. That is sales of product and service to regular customers or clients.

Non-Operating revenue –

This is the revenue generated by the other activities of the company which are undertaken side by side is known as non operating revenue. These other activities are hidden or non-recurring in nature. The activities like scrap selling, asset selling, commission, returns from the stocks, dividends and rent received.

Profit

Profit is the financial gain which is gained by the subtracting of all expenses. Profit is the return gained after taking risk. The portion of the total earned revenue and subtracting all expenditure like material used, labor expenses, machinery, rent, interest and taxes is known as the total profit.

In simple words profit is the surplus amount which is gained when the total income of the business operations is more than the expense for the certain time period.

Profit is the reward for the owner for his risk. Profit is very important for the growth of any business. Higher profits leads to increased survival time of the business in the market. All the stakeholders keep eyes on the profit made by the companies in a certain time period. Profit is decided in three categories which are

Gross profit –

the profit gained by the deduction of the cost which is related to the output.

Operating Profit –

the profit which leaves after subtracting the operating expenses but prior to  the deduction of the interest and taxes is called operating profits.

Net profit –

This is the total profit left after the deduction of the all cost, expenses, interest and taxes from the revenue is known as net profit.

Main difference between Revenue and Profit

1. Revenue is the total earning of the business and organizations after selling products and services without deduction of expenses. While profit is the total amount left after the deduction of the expenses.
2. Revenue is a superset of income. Profit is the subset of the revenue.
3. Revenue = No. Of units sold x selling price per unit. Profit = Revenue-Expense.
4. Revenue is not dependable on profit. Profit is dependable on revenue.
5. Types of revenue are operating revenue and Non-Operating revenue. Profit has three categories Gross profit, Operating profit and Net Profit.

Conclusion

Both these revenue and profit are the bones of the business. Profit is directly proportional to the revenue. Revenue is the total earning of the business after selling the products and assets in a certain time period. Higher the revenue higher the profit. Revenue and profit is very essential for the investments and share market. These days revenue of the business increases with the email marketing.

This is all about the revenue and profit. We hope you like the post. Please feel free to comment on us if you have any doubts. For more interesting topics like this please go through our websites.