Originally published in March 2020. Last updated on April 22, 2025.
Getting lots of quote approvals and sending out record numbers of invoices? That’s great for expanding your customer base, but it doesn’t necessarily mean you’re making more money.
Especially if your costs are increasing at the same time.
To ensure you still have enough to cover your expenses and grow your business, you’ll need to know what is revenue vs profit.
Learn how to monitor your business’s financial performance and health to stay out of the red in this guide.
What’s the difference between revenue and profit?:
Revenue and profit are related, but to get a realistic overview of your business’s financial standing, look at them individually.
What is revenue?
Revenue is your company’s total earnings before you deduct overhead costs, operating expenses, or income taxes.
To calculate your total revenue, use the following formula:
Revenue = Hours worked x Hourly rate
For example, if you worked 50 hours and your hourly rate was $75, your revenue would be $3750.
If you work on a flat rate, you would need to calculate your revenue as follows:
Revenue = Flat rate x Number of jobs
For example, if you charged $500 per job and did eight jobs, your revenue would be $4000.
Revenue terms to know
Revenue (sales)
Also known as sales on a company’s income statement, your total revenue is the dollar amount you’ve generated from operating your business by selling goods and services.
Gross revenue
This number is the total income made on a sale. It doesn’t include the cost of goods sold, operating costs, or other expenses related to the good or service (such as payroll or quantity of materials).
Net revenue
Net revenue is calculated by subtracting the cost of goods sold from gross revenue, along with any adjustments like refunds or price matches. It doesn’t include other business expenses like payroll, rent, or utilities.
What is profit?
Profit is your earnings left over after all of your expenses have been deducted, including utilities, fuel, taxes, insurance, and employee compensation.
To calculate your profit, use the following formula:
Profit = Revenue – Expenses
In service businesses, expenses include all business activity and costs associated with a job, including labor and materials, as well as overhead costs like vehicle maintenance, office supplies, and software subscriptions.
For example, if your total revenue was $3750 and your total expenses were $2500, your profit would be $1250.
Profit terms to know
Profit
Profit is the total you make after subtracting the cost of goods sold, expenses, and payroll.
Gross profit
Gross profit is the profit your business makes after deducting the cost of goods sold (COGS), including the costs associated with completing your services.
Net profit
Net profit is the total profit your business earns after subtracting COGS, operating expenses, taxes, and interest. It gives a clear picture of your company’s health and overall cash flow.
Profit margin
A profit margin is the difference between your profit and revenue. It shows how much profit you make for every dollar in sales.
For example, if your revenue is $10,000 and your profit is $2,000, your profit margin would be 20%. This means you make 20 cents in profit for every dollar in sales.
Profitability
Profitability shows how much profit your business is making compared to its revenue.
If you have a healthy profit margin and make more than you’re spending, your business is profitable. But if you’re spending more than you’re bringing in after covering expenses, you’re not turning a profit.
How is cash flow different from revenue?
Revenue refers to how much money comes into your business, no matter when you receive it.
For example, if you bill a client $1000 for a job, your revenue is $1000 whether they pay you the next day or a month from now.
Cash flow is how much money you have coming in or going out on a day-to-day basis. It includes payments and recurring revenue, as well as payroll, bills, and other expenses.
For example, if the client you billed pays their $1000 invoice right away, that frees up your cash flow, which you can use to cover your expenses.
But if they wait 30 days to pay you, or they only make a partial payment, you’ll have less cash available, impacting whether you can pay your bills, no matter how high your revenue is.
Positive cash flow is when you have money left over after expenses. It means your business is profitable.
Negative cash flow is when you don’t have enough to cover your costs and aren’t turning a profit.
Is revenue or profit more important?
When it comes to understanding revenue vs profit, profit is the most important number to focus on.
Revenue only tells you how much you billed clients for in a given period. Profit tells you how much money you made after all your expenses were deducted.
It gives you a better idea of your business’s financial health by showing you how much you’ve grown, whether you have money to reinvest, and when you need to make changes.
For example, if you have high revenue but low profit, it could indicate that you need to shop around for lower-cost materials or adjust your overhead. Like moving to a remote workplace, renegotiating cell phone plans, or adjusting insurance rates.
If both revenue and profit are low, it could mean you need to work on generating leads, reviewing your pricing strategy, or exploring new marketing strategies.
If you’re struggling to monitor these numbers, use reporting software like Jobber to stay on top of revenue and profit, as well as expenses, payments, and projected income.
It gives you a clear overview of your finances in one place, so you can see which jobs bring in the most money, track trends, and identify issues before they impact your bottom line.
How to strengthen revenue
Revenue growth means closing more sales through effective marketing campaigns, strategic service pricing, and increasing the value of each job. Get started by:
1. Identifying your low-cost, high-value services
These are services that customers want and that don’t cost a lot to complete. For example, you could offer a window cleaning add-on or a pressure washing package that includes driveways and walkways.
They’re quick, use minimal materials, and are great at increasing revenue without significantly impacting your workload.
2. Offering discounts strategically
Promotions and discounts are an effective way to attract new customers, especially for recurring work like weekly mowing or daily dog walking.
For example, you could offer a discount on the first service or for an add-on, but only if the customer signs up for a minimum number of visits. That way, you make up for the loss by generating repeat business, boosting sales revenue, and improving cash flow in the long term.
3. Set smart revenue goals
When setting revenue goals, it’s tempting to pick a random number, like $100,000 a month, because it sounds impressive.
But if you don’t have a clear idea of how to hit that target, it won’t matter.
Instead, factor in:
- Your most popular services
- Your current prices
- What customers ask for, like add-ons or new services
- The number of jobs you can realistically handle each week
- Your operating costs and expenses
- Your profit margin
Then, develop a realistic goal and clear steps for achieving it.
Pro Tip: Jobber Copilot can help you set realistic and attainable sales revenue goals based on your business data, giving you customized advice so you can make more strategic decisions.
How to strengthen profit
Growing profit doesn’t always mean increasing revenue. Instead, you can boost it by:
1. Adjusting pricing
One of the easiest ways to increase earnings is to raise prices. But it’s only worthwhile if you approach it strategically by considering:
- Competitor pricing, like what others in your area are charging for the same services
- Material and labor costs, such as employee salaries, subcontractor fees, job supplies
- Market conditions, like inflation or changes in demand that may impact business operations
- Your customers, as in what kind of clients you typically attract
For example, if you’ve positioned yourself as a value-based service provider and have a loyal customer base, they may not appreciate a significant price hike.
On the other hand, if you’re offering a new premium service to a different subset of clients, you may be able to price it higher without any issues.
2. Tracking expenses
Improving profit doesn’t always mean raising prices. Sometimes it means reducing costs.
But you can only do that if you track your expenses. When you know how much you have going out, it’s easier to see what you can cut back on.
For example, can you find a lower-cost supplier, renegotiate contracts, or use fleet management to optimize fuel efficiency?
Identify where your bills are highest or where they’ve grown over time to figure out where you may be able to lower them, making it easier to increase profit.
3. Streamlining operations
Boosting efficiency can have a major impact on your profit without affecting pricing.
For example, you can use field service management software like Jobber to:
- Optimize employee scheduling so the right people are assigned to each job
- Create and send quotes and invoices to reduce admin work
- Track job costs and expenses to help with job costing and reporting
- Manage jobs through online booking, payment processing, and automated follow-ups
While both revenue and profit are important and worth tracking, profit is the best way to gauge your business’s financial performance. All the revenue in the world won’t matter if you’re not profitable.