Net vs. Gross Sales | Retail Basics

Hey, guys, it's Sarah again with the Boutique Hub. I am back today to give you a quick tip on something that I'm asked an awful lot. One of the things a lot of us get confused about, a lot of retailers especially, is what is the difference between our gross profit margin and our net profit margin? A lot of times people like to talk about the gross profit margin and not necessarily the net. Well, here's the reason why. Often the net isn't as exciting. The reason why is because when we look at our gross profit margin, basically we're comparing the amount of revenue that we bought brought in that over exceeds the cost of goods. That's usually pretty good, right? We hope it is. But the true identifying health factor in our business is on the net. We want to know how much is left over not only after cost of goods, but marketing and labor. Marketing and labor can get out of hand. That can really eat into the bottom, our bottom line, right? So think of it like this. The net is what you are left with. Just like when you take that fishing net and you scoop down into the river and you bring up that big fish, all that's left is what you really want. The fish, all the extra is gone away. It's seeped back out through your net. So that's just a quick little easy way to remember the difference between net and gross. Gross income. Gross profit margin can be very fun to talk about, but at the end of the day, we have to account for everything. So what is left in our net is what's important. All right, guys, for more quick tips or answers to questions that you might have that result around or come from your business or retail or team management, inventory management, you name it, please let us know. Drop them below. You can always reach us@thebotiquehub.com Again, my name is Sarah, and we'll talk soon.