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It's amazing to me how deeply ingrained software profit margins are into the start-up world. That calculator...we're an ecommerce company that holds inventory...I spent 30 seconds searching for how to set gross margins on the revenue then realized it assumes all revenue is 100% gross margin. In most businesses (read: anything other than software and maybe pharma), manipulating margin is one of the biggest levers (maybe THE biggest) you have to affect profitability.

Not to mention other big levers like working capital (and potentially running a business with negative WC and generating cash, a la Amazon). It's funny to be running a start-up in SF and still feel a world apart from a lot of the ecosystem.




Is there a better word? Net revenue? It should be the bottom line of everything that scales, while the red line is the bottom line of everything that's O(1), like engineering. GAAP doesn't seem to have a specific word for that.


Gross profits is the term.

Gross profits is net revenue minus cost of goods sold. Cost of goods sold is only the direct cost of goods, and does not include any operating expenses.

Net revenue is Gross revenues minus discounts, returns and allowances.




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