Turnover vs Gross Profit: Key Differences Every Business Owner Should Know

If you’re serious about improving your business performance, you need to understand the difference between turnover and gross profit.
While they’re both financial figures you’ll see at the top of an income statement, they tell very different stories about your business health.
In this guide, we'll explain the differences clearly, provide examples, and give you a free calculator to check your own numbers.
Quick Definitions
Turnover:
The total income a business generates from selling goods or services — before any costs are deducted.
Gross Profit:
The amount left after subtracting the direct costs (Cost of Goods Sold — COGS) involved in producing the goods or services sold.
Example: Turnover vs Gross Profit
Imagine a business selling bicycles.
- Turnover (Sales) = £300,000
- Cost of Goods Sold (COGS: bikes, parts, materials) = £180,000
Calculations:
Turnover vs Gross Profit at a Glance
Why the Difference Matters
- High turnover is meaningless if gross profit is poor.
- Strong gross profit allows a business to cover operating costs (like salaries, rent, marketing) and still make a net profit.
- Businesses with low gross profit margins must either sell in huge volumes or cut costs aggressively to survive.
Tip: Improving gross profit is often faster and more sustainable than trying to massively grow turnover.
Interactive Turnover and Gross Profit Calculator
Use this simple tool to check your own figures:
Final Thoughts
Turnover shows your business’s total sales.
Gross profit shows whether you’re making money efficiently after covering direct costs.
You can’t build a sustainable business on turnover alone.
You need healthy gross profits to survive, grow, and thrive.
Make sure you track and optimise both!
Strengthen your business financial knowledge with these related guides:
- Is Turnover the Same as Profit? (Simple Explanation for Businesses) — Understand the basic differences between turnover and profit before diving deeper.
- Turnover vs Profit: What’s the Difference and Why It Matters — Explore how turnover relates to overall business success compared to profit.
- Understanding Gross Margin — Learn how gross margin connects gross profit to your business’s financial health.