Profit is what is gained, after costs are accounted for. In accounting, this is usually measured in monetary terms. In economics, profit is most often measured differently, since costs are opportunity costs.

Profit is income received by buying low and selling high. Includes the case in which an entrepreneur buys factors of production and uses them to make something that can be sold for more than the costs of obtaining future inputs. To Karl Marx, in between buying low and selling there must be a production process in which workers produced surplus-value (unpaid labor), the basis for profits.

Profit can be considered as payment for being willing and able to provide funds for net investment (like interest) or for being willing and able to take risks. It is the incentive that drives capitalistic society.

In neo-classical economics, there are a number of different kinds of profit:

• Normal profit
• Abnormal or supernormal or monopoly profit

Profitability refers to the amount of profit received relative to the amount invested, often measured by a rate of profit or rate of return on investment.

A profit however may not indicate a success, or a loss failure. After all many pyrrhic victories could be worse than a simple loss which can be learnt from.

See also

• Income