Summary Matrix
| Attribute | Revenue | Profit |
|---|---|---|
| Colloquial Term | Top Line | Bottom Line |
| Formula | $$\sum (\text{Units Sold} \times \text{Price})$$ | $$\text{Revenue} - \text{Total Expenses}$$ |
| Impact of Costs | Ignores production, ad, & shipping costs | Deducts COGS, ad spend, shipping, software |
| Business Health Indicator | Measures store volume & market demand | Measures financial viability & sustainability |
Key Difference
Revenue is money coming in. Profit is money left over after paying all bills, suppliers, shipping carriers, and marketing costs.
A store generating $1,000,000 in revenue with $1,100,000 in expenses is operating at a $100,000 loss.
Developer Takeaway
ROAS vs. POAS: In ad campaign tracking, optimize for Return on Ad Spend (ROAS based on revenue) or Profit on Ad Spend (POAS based on profit margin) to prevent spending more on ads than a product's net profit margin.