We begin with an explanation of Gross Margin Analysis and Partial Budgeting Analysis. Then we show how these concepts are applied by comparing several Internet business tactics. I challenge you to plow through these articles. The examples have a lot of numbers, but should aid in your understanding. If you can understand these principles and apply them in your business, you will quickly separate yourself from the millions of wannabees on the Internet.
Profit is the difference between revenues and expenses.
But, let's look at it a little differently in a way that will give some insight into what business strategies may be used to improve profits. The direct costs are the variable costs that go up or down based upon the number of units sold. That is, in the short run. For example, in one month, the payroll for the company will not vary much regardless of the number of units sold. But not everything stays equal.