Gross Sales vs Net Sales vs Total Sales on Shopify, Explained

On Shopify, gross sales is product price multiplied by quantity before anything is taken off. Net sales is gross sales minus discounts and returns. Total sales is net sales plus shipping charges and taxes. This guide takes each term in order, works one example, explains how returns are dated, says which figure suits which job, and shows why every tool you use should follow the same definitions.

What is the order of the calculation?

It runs in one direction, and each line has a fixed place.

1. Gross sales: the price of each product multiplied by the quantity sold. No discounts, no returns, no shipping, no tax.
2. Discounts: the value of discount codes and automatic discounts applied to those products. Subtracted.
3. Returns: the value of products that were returned. Subtracted.
4. Net sales: what is left after those two subtractions.
5. Shipping charges: what customers paid for delivery. Added.
6. Taxes: the sales tax or VAT collected on orders. Added.
7. Total sales: the result.

Net sales is therefore a product figure: what your goods earned after price reductions and returns. Total sales is a customer figure: what buyers were charged in all.

What does that look like for one order?

Here is an example with made-up round figures.

Say a customer buys two units of a $50 product with a 10% discount code, pays $5 for shipping and is charged $9 in tax.

• Gross sales: 2 multiplied by $50, or $100
• Discounts: minus $10
• Returns: none
• Net sales: $90
• Shipping: plus $5
• Taxes: plus $9
• Total sales: $104

The customer's card was charged $104. Your product revenue is $90. If someone asks 'what did we sell?', both answers are correct, which is why it helps to name the figure every time you quote one.

When are returns counted?

On the date the return is recorded, not the date of the original order. This is the detail that causes the most confusion.

Suppose the customer above sends one unit back three weeks later, in the following month. The original month keeps its $90 of net sales. The later month receives a negative entry for the returned unit. Nothing is rewritten in the past.

The consequence: a month with a big promotion looks strong at first, and the returns from it lower the month after.

For judging a product or a campaign, it is often more useful to match returns to the sale they belong to. That is a different view from Shopify's sales reports, and our guide to tracking refund rate and return rate covers how to build it.

Which figure should you use for what?

Use the one that matches the question.

• Gross sales for demand at list price. It shows how much product moved before any price cutting, and comparing it with net sales shows how much you gave away to move it.
• Discounts as a share of gross sales for how dependent trading is on promotions. A rising share means more of your volume needs a reason beyond the product.
• Net sales for product performance, average order value, targets and anything to do with margin. Cost of goods is set against net sales to give gross profit. Our guide to calculating net profit continues from there.
• Taxes for what was charged on orders as sales tax or VAT. Shopify keeps this outside net sales, and your targets should too. Reports by state or country help you keep it in view, but what to file is a question for your accountant, and this guide is not tax advice.
• Total sales for reconciling against what customers paid, before payment fees.

Most management reporting should be in net sales. Targets set in total sales rise and fall with tax rates and shipping choices that say nothing about how well the products sold.

Why does total sales not match the bank?

Because a payout is a different thing from a sale. Your payment provider reports money that moved: total sales, less its fees, less refunds, on the dates the money settled.

Other sources differ for their own reasons:

• Ad platforms report the value of orders they claim credit for, usually dated to the click and not the purchase, and each platform counts independently. Our guide to ROAS, CAC and MER deals with that.
• Analytics tools that rely on tracking only see orders from visitors who allowed analytics, so their revenue totals run lower than Shopify's order records.

None of these is broken. They answer different questions, and the Shopify definitions are the fixed point to reconcile them against. The guide to what Shopify's built-in reports show goes further into where the built-in figures stop.

Why should a reporting app follow the same definitions?

Because otherwise you maintain two versions of the truth. If an app counts shipping inside 'revenue', or dates returns to the original order while the admin dates them to the return, its monthly figure will never agree with Shopify's, and every meeting starts with an argument about which is right.

When you evaluate a reporting tool, test it:

1. Pick a closed month.
2. Note gross sales, discounts, returns, net sales, shipping, taxes and total sales from the Shopify admin.
3. Find the same seven lines in the tool.
4. If any differ, ask why before trusting anything built on top of them, such as profit or lifetime value.

This is a design principle for Marka Metrics: its sales, product and customer dashboards follow Shopify's sales definitions, so the figures can be checked against the admin.

A short checklist

1. Memorise the order: gross sales, minus discounts and returns, gives net sales; plus shipping and taxes gives total sales.
2. Name the figure whenever you quote a sales number.
3. Set targets and judge products in net sales.
4. Remember that returns are dated to the return, and expect them to trail promotions.
5. Reconcile payouts against total sales less fees, allowing for settlement dates.
6. Check any new tool against the admin for one closed month.

Three sales figures are plenty, provided everyone uses the same three. If you want dashboards that keep to Shopify's definitions and break sales down by product, city, sales channel or payment method, Marka Metrics was built on that basis.