But it can also be included in the tax cost, or the rent cost or more.
There are many factors that affect the final profit, and different enterprises vary greatly under different circumstances. Gross profit is considered as the main expenditure of this business.
The significance of calculating gross profit is that if you don't do business, some resources will be wasted or still consumed, and profits will become negative; Doing this business may make a profit or reduce losses.
For enterprises with good efficiency and high resource utilization rate, the concept of gross profit can be completely ignored.
Extended data:
There are two main ways to improve gross profit margin. First of all, we can raise the price of our products. Second, it can reduce the production cost of products. Of course, both are easier said than done.
Raising product prices may lead to a decline in sales. If the sales drop sharply, the total income may not be enough to cover the operating expenses. The price increase also needs a deep understanding of inflation rate, competitive factors, the basic supply and demand relationship of products and so on.
The second way to improve the gross profit margin is to reduce the variable cost of producing products. This can be achieved by reducing the cost of raw materials or improving the production efficiency of products. Full discount is a good way to reduce the cost of raw materials.
The more raw materials you buy from suppliers, the more likely they are to offer special discounts. Another way to reduce the cost of raw materials is to find suppliers with lower prices. However, if the quality of raw materials provided by the other party is not good enough, then you have to sacrifice the reduction of raw material quality.
References:
Baidu encyclopedia-gross profit