Net Production vs. Gross Production

In manufacturing, production is putting raw materials through the manufacturing process, resulting in products. In sales, production is selling the products -- producing revenues. In economics, production is the total value of business done in a specific sector of the economy, or the economy as a whole -- such as in gross domestic production.

A definition of the difference between gross and net is gross refers to the total and net refers to the part that really matters. A good way to understand the relationship between gross and net is to look at the use of these words in financial statements. Gross income is the total income received. Net income is how much of that gross income is left after all the bills have been paid.

Gross production in manufacturing is the total output of the manufacturing process, which includes the use of resources and the act of manufacturing. Resources include land, labor, capital and organization as well as the raw materials. The product of this process should have a market value that is greater than the resources used in production, or the company will lose money. Net production is the profit after the costs of resources used in production are subtracted.

Gross production and net production are slightly different in sales. Depending on how commission is figured, there is a further difference. If commission is assigned on a unit basis and paid out as a percentage of gross production, the total of the commission units is the gross production and net production is the percentage payout to the sales rep. Otherwise, the total amount of sales made by a rep is the gross production for that rep and the commission paid is the net.

Gross domestic product is the total value of a nation's output of goods and services. Net domestic product is what is left of GDP after the depreciation of the nation's capital stock. In other words, as factories, vehicles, machinery, office buildings and other elements of the physical resources age and deteriorate, their replacement cost must be accounted for in the nation's production figures. Just like any company would have to account for the cost of replacement of its capital resources, a nation must produce enough to replenish its used resources, plus make a profit.