On the books, a venture can look profitable — and still be quietly losing money. You'll compute the profit, classify each cost, then reveal the hidden cost that flips the verdict.
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Profitable on the books — until you count the cost that isn't there.
Accounting profit subtracts only the costs that leave your bank account — the explicit costs. Economic profit also subtracts the implicit costs: everything you gave up to do this — the salary you'd earn elsewhere, the rent your own building could fetch, the return your money could make.
Step 1 — Calculate the revenue
Quantity sold × price
Step 2 — Sort each cost: paid out, or given up?
Explicit total (paid out)
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Implicit total (given up)
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Step 3 — Compute the two profits
Reads left to right: revenue, then each cost steps the running total down. The three solid bars are the levels that matter — revenue, accounting profit, and the bottom line, economic profit. The muted bars are explicit costs paid out; the ghosted bars are the implicit costs you gave up. Hover any bar for the math.
The verdict — was it worth it?
The waterfall showed where the money went. The scale asks the real question: is the venture worth more than your next-best life?
Left pan: what the venture nets you, after the bills you pay (accounting profit). Right pan: everything you gave up to do it (implicit costs). The heavier side wins — and the gap between them is economic profit. Level means it's a wash: normal profit.