What is the difference between profit margin , gross margin , and revenue ?
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For an example, let’s say you run a hot dog stand where you pay $1 for a hot dog and its bun then sell it for $2.50.
Revenue is the money your business takes in which is $2.50 per dog.
Gross margin is the difference between the cost of goods and their selling price. Here it would be $1.50 per dog.
Profit is what you get to keep after covering *all* the costs. That $1.50 isn’t what you keep. You need to subtract the cost to heat the food, pay for your business license, rental for your hot dog cart, etc.
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