Gross vs Net: What's the Difference?
Gross is the amount before anything is taken out. Net is what is actually left afterward. That simple distinction shows up in pay slips, business accounts and even shipping labels.
Gross vs net pay
Your gross pay is your salary before tax and deductions. Your net pay (take-home pay) is what lands in your account after income tax, pension and other withholdings. Two people with the same gross salary can take home very different amounts depending on their tax and deductions.
Gross vs net income
For a business, gross income is revenue minus the direct cost of goods sold. Net income is what remains after all other expenses, tax and interest. Gross tells you how profitable the product is; net tells you whether the whole business made money.
Gross vs net profit
Gross profit margin measures the product; net profit margin measures the company. A business can have a healthy gross margin but a thin net margin if its overheads are high.
A quick example
Sell something for 100 that cost you 80, and your gross profit is 20 (a 20% margin). If rent, wages and tax then take another 12, your net profit is 8.
Work it out
Convert a salary into take-home terms with the Salary Calculator, and check product profitability with the Profit Margin Calculator.
Frequently asked questions
What is the difference between gross and net pay?
Gross pay is your salary before tax and deductions; net pay is what you actually take home after them.
Is gross or net profit more important?
Both matter. Gross profit shows how profitable the product is; net profit shows whether the whole business made money after all costs.
Why is my net pay so much lower than gross?
Income tax, pension and other deductions come out of gross pay. The size of the gap depends on your country's tax rules.