Definition (canonical)
Gross is the amount BEFORE deductions; net is what remains AFTER them — one rule wearing four different costumes: prices (before/after tax), pay (salary vs take-home), margins (gross vs net margin) and revenue (billed vs after returns and discounts). Every costly confusion between the two comes from not asking the only question that matters: deductions of WHAT?
The four contexts, disentangled
Prices: gross price includes consumption tax (VAT/sales tax), net excludes it — B2B talks net (business buyers reclaim the tax), B2C displays gross (consumers pay it); quoting the wrong one to the wrong audience is the classic cross-border e-commerce wound. Pay: gross salary is the contract number; net is what hits the account after income tax and social contributions — while the EMPLOYER'S true cost sits above gross (payroll taxes on top): three numbers, not two, and negotiations that mix them end badly. Margins: gross margin deducts only direct costs (COGS) from revenue; net margin deducts everything (opex, interest, tax) — a 60% gross / 5% net company is normal SaaS, not a contradiction. Revenue: gross revenue is everything billed; net revenue subtracts returns, refunds and discounts — marketplaces add a twist (GMV vs the platform's net take), where reporting gross as "revenue" is the oldest inflation trick in pitch decks.
The one rule and the costliest mix-ups
Universal decoder: net = gross − deductions, so any time two numbers share a name, ask what sits between them. The recurring accidents: pricing a contract in net while the client heard gross (a 23-percentage-point dispute in VAT countries); hiring against gross salary while budgeting employer cost (10–30% surprise depending on jurisdiction); comparing your NET margin to a competitor's GROSS in a benchmark deck; celebrating gross revenue growth while net revenue stalls under swelling refunds — refund rate hiding between the two numbers is a product-quality alarm, not an accounting nuance. Professional hygiene: label every number (gross/net + of what) in offers, dashboards and models; unlabeled numbers are how spreadsheets lie politely.
FAQ
Is EBITDA gross or net? Neither cleanly — it's profit before interest, tax, depreciation: a custom "net of some things" cut; precision beats the binary here.
Which belongs in a price list? Audience decides: consumer-facing → gross (legally required in many markets); B2B catalogs → net with tax shown at checkout.
Gross vs net in contracts — any default? No safe default across borders: state it explicitly every time; "prices exclude applicable taxes" is one sentence that prevents entire disputes.
Related: Margin · Revenue · Income vs Revenue (PL) Reviewed: 2026-07-20 · Sources: accounting & payroll canon