Revenue does not = profit

Let’s clear up a bit of confusion around revenue and profit. Basically, they’re not the same thing. I’ve been reading a bunch of student responses that talk about a company earning profit when they really mean revenue…

I want to clarify this misconception. And I’m trying to clarify it by using apples.

Quick facts: revenue is income received by a business (in our example). Profit is the difference between revenue earned AND the cost of selling the products. 

Try this example (given to me by a Year 6 student). 

You sell apples. You buy them from the wholesaler for $1 each. You then turn around and sell these apples to consumers for $10 each.

Your revenue is $10 (received from the consumer).

Your costs are $1 (the purchase price of the apple for you).

Thus, your profit is a tidy $9 per apple.

Can I also mention that governments don’t generally earn profit? Governments earn taxation revenue. They don’t earn profits from taxation. So, don’t write this. Please.