What a business actually keeps after subtracting all expenses, taxes, and costs from its total income; also called the bottom line or profit.
Net income is what your business actually keeps: gross income minus every expense, from software to taxes. It’s the bottom line — the number that tells you whether the business is really working. On $120,000 of gross income with $40,000 in costs, your net income is $80,000.
For sellers, net income is the figure to run your life on. It’s also, roughly, what your self-employment and income taxes are calculated from, so a higher net income means a higher tax bill — one more reason to track business expenses carefully. For buyers, this is behind the scenes, but it’s why sustainable freelancers can’t price at rock bottom: net income has to support a real living.
Don’t confuse strong revenue with a healthy business. Plenty of busy freelancers gross well and net little because their costs, or their unpaid hours, quietly eat the difference. Watching net income over time — not just what’s coming in — is how you know whether to raise your rates.