What is a Profit Center?

What is a Profit Center?

February 9, 2024

A profit center is a specific segment or unit within an organization that is responsible for generating revenue and directly contributing to the company’s profitability. Unlike cost centers, which incur expenses without directly generating revenue, profit centers are focused on increasing sales, reducing costs, and maximizing profits. Profit centers typically have their own budgets, targets, and performance metrics, allowing management to assess their financial performance independently. Examples of profit centers include sales departments, product lines, or business units that generate revenue through the sale of goods or services.

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