A profit center is a business unit or department within an organization that generates revenues and profits or losses. Management closely monitors the results of profit centers, since these entities are the key drivers of the total results of the parent entity. The manager of a profit center usually has the authority to make decisions regarding how to earn revenue, and which expenses to incur.
Profit centers may be included in the segment reporting of a publicly-held entity. Privately-held businesses do not have to report this information.
Other types of reporting entities within a business are the cost center and investment center. A cost center is only responsible for its costs, while an investment center is responsible for its return on assets. In terms of responsibility level, the profit center lies between the cost center and responsibility center.