Understanding Profit: It s More Than Meets the Eye

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1. Profit is not just the selling price: The owner of the coal company bought the coal at $1 and sold it for$3, making a profit of $2. However, there are other costs to consider, such as employee salaries, rent, and electricity.
2. Net profit is the total profit after accounting for all costs: The total profit is not just the selling price minus the buying price. It's the selling price minus all the costs associated with the transaction, including the costs of doing business.
3. The selling price is not necessarily the total profit: The selling price of $3 represents the total amount of money received from the sale, but it doesn't reflect the actual profit made by the company. The actual profit is the net profit, which is$2 in this case.

Source: Net Profit Vs. Gross Profit (What'S The Difference), Alex Hormozi