Implicit Cost And Explicit Cost. Economic profit is total revenues minus total costs—explicit plus implicit costs. Explicit costs include direct payments or fees that occur at the time of purchase, such as taxes or shipping charges.

Together, implicit and explicit costs are opportunity costs: Because of the relationship between implicit and explicit costs, both calculations are required when calculating accounting profit and economic profit for a company. Explicit costs include wages, lease payments, utilities, raw materials, and other direct expenses.