How to Calculate Net Profit on a Shopify Store, Line by Line

To calculate net profit on a Shopify store, start with net sales plus the shipping you charged, then subtract cost of goods, the shipping you paid, payment fees, app and platform fees, ad spend and the cost of returns. What remains is the profit from trading, before overheads such as salaries and rent. This guide goes through each line, says where the number comes from, shows the per-order version, and works one example.

Where should the calculation start?

With net sales, as Shopify defines it: gross sales minus discounts and returns. Add the shipping charges customers paid, because you will be subtracting the full cost of postage further down. Leave out the taxes collected on orders, which Shopify also keeps outside net sales.

Starting here matters because it keeps your profit sum tied to a number you can check in the admin. If you begin from payouts or from the bank, you are starting part-way down the calculation, with fees already taken and dates shifted. The difference between the sales figures is set out in our guide to gross sales, net sales and total sales.

What do you subtract, and where does each number come from?

Six lines cover most stores.

1. Cost of goods. What you paid for the units you sold, including inbound freight and packaging if you can attribute them. Source: the cost field on each product variant in Shopify. If it is empty, no report can work out margin for you, so fill it in and update it when supplier prices change.
2. Shipping cost. What the carrier or fulfilment partner charged you, not what the customer paid. Source: carrier invoices, your label provider or your warehouse's monthly statement.
3. Payment fees. The percentage and fixed fee taken on each transaction, which vary by method and card type. Source: your payment provider's payout or transaction report.
4. App and platform fees. Your Shopify plan, apps billed through Shopify and any tools billed elsewhere. Source: your Shopify bills and card statements.
5. Ad spend. Everything paid to ad platforms, plus fees to agencies, creators or affiliates. Source: each ad platform's billing page, not its dashboard estimate.
6. Returns. Refunded sales are already out of net sales. What remains is the cost a refund leaves behind: return postage you covered, outbound postage that is gone, payment fees that are not handed back, and stock that cannot be resold. Source: refund records and your returns log.

Subtract the first line alone and you have gross profit. Subtract all six and you have net profit from trading.

What does a worked example look like?

Here is one month with made-up round figures.

Say a store has net sales of $50,000 and charged customers $2,000 for shipping, giving $52,000 to work from.

• Cost of goods: $20,000
• Shipping cost: $6,000
• Payment fees: $1,500
• App and platform fees: $500
• Ad spend: $10,000
• Cost of returns: $1,000

Costs total $39,000. Net profit from trading is $52,000 minus $39,000, or $13,000, which is 25% of the $52,000.

Gross profit, at $32,000, looks comfortable. The gap between $32,000 and $13,000 is where most of the decisions are.

How do you get profit per order?

Apply the same lines to a single order. This is the view that tells you which orders are worth winning.

• Direct costs attach to the order exactly: cost of the items in it, the postage for that parcel, the payment fee on that transaction.
• Ad spend has to be allocated. The plain method is the period's spend divided by the period's orders.
• Fixed fees are the month's total divided by the month's orders.

In the example, if the store took 1,000 orders in the month, the average order brought in $52 and cost $39, leaving $13. Behind that average, some orders will be losing money: a single low-priced item sent to a distant address and bought through an expensive ad, for instance. Sorting orders by profit, and then grouping by product, channel and destination, shows which combinations to stop paying for.

Per-order profit is also the right test for any offer meant to lift basket size, which our guide to average order value goes into.

What gets left out most often?

The costs that arrive on a different invoice or in a different month.

• Discount-funded shipping. Free shipping is a real cost even though the order shows a shipping charge of zero.
• Returns that land later. A return in March against a February sale lowers March's figures. Looking at one month in isolation can flatter it.
• Fees on refunded orders. When you refund a customer, the original payment fee is often not returned to you.
• Agency and creator fees. They are marketing cost even though no ad platform reports them.

Overheads such as salaries, rent and professional fees sit below this calculation. They are real, but they do not change with each order, so keep them as a separate line and judge trading profit against them. Tax on profit is a matter for your accountant, and nothing here is tax advice.

How often should you run it?

Monthly, by joining four sources: orders from Shopify, costs from product records, fees from the payment provider and spend from ad platforms. As the guide to what Shopify analytics leave out notes, Shopify can report gross profit when costs are entered but does not know your ad spend. Marka Metrics reports gross profit on its free plan, and its Growth and Pro plans add net profit with product costs, fees and ad spend, alongside ROAS and customer acquisition cost. Those two ad measures are explained in our guide to ROAS, CAC and MER.

A short checklist

1. Enter a cost for every product variant in Shopify.
2. Start from net sales plus shipping charged, excluding tax.
3. Subtract cost of goods, shipping cost, payment fees, fixed fees, ad spend and return costs.
4. Take costs from invoices and billing pages, not estimates.
5. Repeat the sum per order and sort by profit.
6. Keep overheads as a separate line below trading profit.

Revenue tells you how busy the store was; this calculation tells you whether it was worth it. If you would like profit worked out from your orders, costs and ad spend in one dashboard, see Marka Metrics.