Below, we explain gross income in practical terms, how to calculate it without complex reporting, what it affects, and where to find the underlying project and company figures in the 101 App.
Contents:
Why is “gross income” confused with revenue and gross profit?
In everyday speech, people call almost anything “income”: a payment received, completed work, profit or a markup. To manage a business, define these measures separately and use the same terms throughout the team.
Management accounts commonly distinguish income in a broad sense, revenue from obligations fulfilled, and profit as revenue less expenses. The 101 Blog explains revenue separately as the value of fulfilled obligations.
Another source of confusion is that “gross income” is sometimes used informally to mean gross profit. Gross profit is defined by direct costs: it is the difference between revenue from a service and the costs of delivering it.
What does gross income mean here?
For decisions about prices and costs, this article uses a working definition: gross income = revenue − cost of sales (the direct costs of performing work or providing a service).
In this sense it is gross profit. For a fuller discussion of the measure and its boundaries, see the 101 article on gross profit (in Russian).
On a project, direct costs usually include materials, tradespeople and subcontractors, delivery, consumables and equipment used on site. Office rent, accounting and management salaries are generally considered at the next stage, when calculating operating and net profit.
Why track it and how can you use it?
Gross income helps you monitor the economics of a project while work is still in progress. If the figure falls, there may still be time to revise the estimate, stop overspending on materials, adjust prices or agree changed terms with the customer.
It also helps you avoid the trap of high turnover with little return.
Practical uses include:
- Checking whether prices leave enough gross profit to cover fixed costs and still make a profit;
- Comparing types of work to see which stages earn a healthy margin and which continue only out of habit or to keep staff busy;
- Spotting purchasing costs that rise faster than revenue from completed work;
- Measuring how much gross profit a discount gives away and what could offset it.
What does it affect?
Gross income affects business resilience. It is the amount left after direct costs are deducted from revenue, from which fixed costs, taxes, interest and development must then be funded. It is an accounting result, not a cash balance.
When the measure falls, the cause is often price, direct cost or the mix of projects. Prices may fall because of discounts, unpaid extras or weak control of additional work. Direct costs can rise because of last minute purchases, wasted materials, rework, wrong quantities or extra transport.
It also sets a useful boundary for incentives. When a team discusses bonuses or shares, project gross income is a clearer starting point than impressions alone.
How do you calculate it?
Basic formula: gross income = revenue − cost of sales.
To compare projects of different sizes, calculate gross margin = gross income ÷ revenue × 100%.
Example: work worth RUB 1,200,000 was completed on a project during a month. Direct costs (materials, subcontractors and piece rate pay for tradespeople) were RUB 850,000. Gross income was RUB 350,000. Gross margin was 350,000 ÷ 1,200,000 × 100% = 29.17%. These ruble figures illustrate the calculation; they are not prices for another country.
Use the same process for every project:
- Choose a period: a week, month or project stage.
- Record revenue for that period under your company’s policy, usually from completed work, signed acceptance records or confirmed reports.
- Collect only direct costs belonging to the same project and period.
- Subtract those costs from revenue to obtain gross income.
- Calculate the percentage margin if you need to compare projects or types of work.
A common mistake is to confuse cash received with revenue. A customer advance improves cash flow, but it does not create gross income until the work is completed and the related direct costs can be matched. The 101 Blog discusses this in its revenue article (in Russian) and its revenue versus profit article (in Russian).
Where can you find the figures in the 101 App?
The 101 interface may not call this measure “gross income.” To calculate it, compare revenue from completed work with the related direct costs for the same period.
Start with these records:
- Customer receipts. Advances and payments are recorded as “Receipt” events. After an event is confirmed, the amount is credited to the project balance.
- Revenue from completed work. In the 101 model, revenue follows confirmed obligations rather than the date cash is transferred.
- Profit and markup in “Report” events. The event card shows amounts charged to the customer along with profit and markup figures, displayed in different colors.
For a quick view of project cash, check the project balance. It tracks money movements; do not treat it as calculated gross profit.
To analyse amounts by person or role, such as a project manager, partner or subcontractor, use the relevant project balance and “Earned” measure. Check distribution settings separately and compare those values with project revenue and direct costs.
To compare projects, use analytics. Compare revenue and direct costs for the same period and calculate gross profit and its share consistently for every project.
In a 101 App presentation, an expert can show where revenue, direct costs and profit appear in your setup and how to calculate gross profit by project.
